Flood losses put at $10-20b

Recent estimates of losses from the floods have been placed at a range between $10 billion and $20 billion, according to research conducted by KASB Securities.

As the prospect of a recession, rising inflationary pressures and widening twin deficits rears its head, the State Bank is expected to either maintain status quo or increase the discount rate by a further 50 basis points to 13.5 per cent, according to analyst Hamza Marath.

The KASB report labels the current floods as the ‘worst in history’ and estimates losses of between three billion to four billion dollars for the agriculture sector. Total losses are being estimated at $10-20 billion for the economy, according to Marath in the report. It must be remembered that Pakistan’s total output is close to $175 billion. It is expected that expected escalation in commodity prices fuelled by almost zero global real interest rates will augment inflation in Pakistan. Fiscal deficit and current account deficit are expected to be six and four per cent of GDP, respectively.

Published in The Express Tribune, September 11^th, 2010.