Wary investors

Published: April 19, 2018

Trust in the country’s markets by foreign investors has dwindled ahead of elections. Despite economic indicators such as GDP showing that numbers are on an upward trend, there has been a sharp decline between the foreign direct investment (FDI) in March 2018 at $152.7 million, compared with $318.3 million in March 2017. The State Bank of Pakistan released this data months ahead of elections but highlights also include that in the first three quarters of this fiscal year, FDI increased by 4.4%. Conclusively, any positive news reported from economic data should be seen with speculation.

While the greater overall FDI is promising, analysts have never been able to rule out volatility in the markets. Not long ago, mutual funds took a heavy hit and more recently, the value of the rupee fell to approximately Rs115 to the US dollar. Inflation is synonymous with the market economy and this impacts the ration-seeking family below the poverty line and the middle-income families who are unable to ‘dream bigger’. Statements by the secretary general of the Overseas Investors Chamber of Commerce and Industry are hyperbolic in nature when the financial hardships of millions of citizens are taken into consideration. Although we would welcome investment decisions in the pipeline by foreign economies to result in the positive, the imminent elections and some of the turbulence already experienced have the potential to cause a long-term directional shift in economic trends.

Unstable gains in the market must be transformed into steady gains and this can only be achieved via a stable political arena. The potential to grow exists but so does the possibility of a crash; foreign investment in the Pakistan Stock Exchange to decrease from $5.3 million in March 2017 to $300,000 this year. The negative financial impact of political dirt slinging must be realised by political leaderships. It is time to adopt professionalism and maturity in politics so that the country can attract investments for the betterment of its citizens.

Published in The Express Tribune, April 19th, 2018.

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