Dwindling foreign reserves have forced manufacturers in Pakistan to shut down production, as raw materials remain stuck at ports in the country.

According to Bloomberg, Suzuki Motor Corp and Ghandhara Tyre & Rubber Company were two manufacturers amongst several listed companies who have stopped production due to inventory shortages, battles in obtaining clearance for shipments from commercial banks or a drop in demand.

“These closures will impact the economic growth as well as increase unemployment levels in the country,” said Tahir Abbas, head of research and investment at Arif Habib Limited, to Bloomberg, adding he has never seen shutdowns of such an extent among listed companies.

In addition, South Korean companies in Pakistan have also raised concerns about operational shutdown due to the dollar crisis, reported Dawn News. According to its report, the Korea Trade-Investment Promotion Agency (Kotra) and the local chamber of Korean Investors said the non-opening of letters of credit for imports of raw materials cost Korean companies “millions of dollars” in lost sales.

“We request that the government should release all pending LCs opened by Korean companies and their partners while allowing them to open new LCs to continue operations,” said Sung Jae Kim, Director General at Kotra Karachi, adding that the government should issue a “clear policy statement” in support of export-oriented foreign companies, reported Dawn.

Pakistan’s foreign reserves of $3.19 billion currently amount to less than a month’s worth of imports. This has driven the government to curtail imports leaving around 6,000 containers stranded at the ports.

As a result of a shortage of goods, inflation rose to a 48-year high in January, stifling demand. Along with inflation, the Pakistani rupee fell to a record low after the limit on the dollar-rupee exchange rate was lifted.

“The situation this time has become very critical as compared to the crises we had seen in 2018 or 2008,” said Abbas, who expects economic growth to slow to a range of 1%-1.25% this fiscal year ending June from 6% a year ago, reported Bloomberg.