Pakistan’s economy enjoying period of optimism: report

By APP
Published: May 3, 2015
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The Economist credits PML-N govt for economic stability in the country. STOCK IMAGE

The Economist credits PML-N govt for economic stability in the country. STOCK IMAGE

ISLAMABAD: Visitors to Pakistan are surprised to discover a strong business culture and good roads as the country is mid-table in the World Bank’s ease-of-doing-business rankings, well above India, reports The Economist newspaper.

“Those in search of a thriving stock market, a stable currency and low inflation would not normally pitch up in Pakistan. It is more readily thought of as a pit of instability than as a source of opportunity. Yet Pakistan is enjoying a rare period of optimism about its economy,” The Economist said in a recent article about Pakistan’s economy.

The newspaper while highlighting Pakistan’s economic performance said that International Monetary Fund (IMF) reckons that the economy will grow by 4.7% next year, the fastest rate in eight years. Consumer prices rose by 2.5% in the year to March, the smallest increase for more than a decade. Twice already this year the central bank has lowered its benchmark interest rate.

Some indicators are pointing to an upturn in spending. Compared with a year earlier, cement sales, which are a guide to how much construction is taking place, rose by 5.5% from July to March. Car sales rose by 22% over the same period, the paper said.

It added that a fall of two-fifths in the oil price is a huge slice of luck for a country such as Pakistan. It relies on imported fuel oil for two-fifths of its power supply and is prone to periodic balance-of-payments crises. The country’s import bill can easily overwhelm the foreign-exchange earnings from textile exports and the remittances that Pakistanis working in the Middle East and Europe send home.

In 2013-14 Pakistan’s net import bill for oil came to $12.6 billion, or around 5% of GDP. But if oil prices stay low, Pakistan could save a total of $12 billion in the next three years, the paper said quoting the IMF. The money could be spent on things with more local content and give the economy a lift, it added.

It said that the government of Nawaz Sharif takes some credit for the economy’s new stability. It has stuck to an IMF programme agreed to in 2013, a few months after it came to power in Pakistan’s first-ever handover from one civilian government to another. Foreign-exchange reserves have more than doubled, to $17.7 billion.

Electricity tariffs have been raised, and some unpaid bills collected, easing the cash burden on hard-pressed distribution companies. Tax receipts have risen, albeit from pitiful levels, in response to efforts to broaden the base and cut exemptions, the paper said.

The Economist said that the revenue agency has sent over 150,000 tax notices to non-payers. More retailers are being drawn into the indirect-tax net. A draft budget aims to bring the budget deficit below 4% of GDP in 2015-16, from a peak of over 8%.

A privatisation drive that stalled last June resumed in April, when the government sold its stake in Habib Bank for $1 billion. Three-quarters of bids came from foreign investors. Pakistan’s stockmarket has doubled in dollar terms since the start of 2012, thanks in large part to such foreign interest.

The Economist said that the progress in providing economic stability is encouraging. But Pakistan needs sustained growth of 5-7% a year if it is markedly to cut poverty-at the last count, nearly a quarter of Pakistanis were below the poverty line. 

Published in The Express Tribune, May 3rd, 2015.

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Reader Comments (29)

  • Arqum
    May 3, 2015 - 10:35AM

    Though a hardcore PML N, but steps taken by the govt to stabilise the economy must be appreciated.Recommend

  • Econ
    May 3, 2015 - 10:45AM

    Well done PMRecommend

  • Supersequel
    May 3, 2015 - 10:45AM

    The best way to manage Pakistan is first through restructuring of the capital structure of the government of Pakistan, which the Shariff brothers have focused on, from obtaining low cost-of-capital debt and through offering equity in Pakistan public corporations. Now, the next step is for the GOP to maintain a solid capital structure and focus on organic growth, from increasing revenue to productivity through investment schemes.Recommend

  • Jumma Khan
    May 3, 2015 - 10:56AM

    It is true. For the first time in my seven year career as an investment professional outside Pakistan, I was approached by two senior executives of renowned global money managers recently asking for my views on their planned investment in Pakistan. In spite of the slate of security issues, they see Pakistan’s market and economy gaining stability and momentum while offering attractive potential upsideRecommend

  • sabi
    May 3, 2015 - 11:32AM

    This is just the beginning.Let democracy works uninterruptedly and you will see many many economic wonders.What do you say Hasan Nisar, the great thinker! you had predicted the opposite for N Sharif’s government.Recommend

  • sabi
    May 3, 2015 - 11:35AM

    This is a great news for every Pakistani except for the enemies of Pakistan I mean the inquilabis and co.Recommend

  • roarwali
    May 3, 2015 - 11:47AM

    Our economy enjoys period of optimism in newspapers. Recommend

  • yes
    May 3, 2015 - 11:49AM

    Credit must be given where it is due.. Well done Nawaz Sharif.. be stronger and collect more tax from rich and finish up power projects before 2017.. and you will have our vote this timeRecommend

  • Farooq
    May 3, 2015 - 1:31PM

    Time will tell if the economy is really improving or only certain areas of Punjab are improving. I must agree we are better off than we were in 2010 under Mr Zardari but we still have a long way to go before reaching 8% growth we achieved in 2005.

    Still youth are struggling with finding jobs and good news is not all over Pakistan. A lot of work is still required in seciruty issues, terrorism and power generation till the economy jump starts.

    PML N has to stop this secrecy in doing govt work. Still people are not sure what is the real route of this new economic corridor? I have serious doubts about this economic growth since it is limited to metropolitan areas and villages continue to suffer and the judicial system is only going from bad to worseRecommend

  • Arqum
    May 3, 2015 - 3:19PM

    @sabi: I am a PTI supporter but I appreciate the PML N govt effort to revive the economy. You, my friend should grow up and stop labelling ur opponents as the enemy of Pakistan. Recommend

  • faisal
    May 3, 2015 - 5:35PM

    Another shut up call for IK and supportersRecommend

  • Kalaam
    May 3, 2015 - 6:33PM

    There have been no major reforms since the PML-N took over power:

    Energy sector is still a mess. Circular debt is rising and power cuts are a daily fact of life. Public sector companies in the gas sector will soon turn loss making when expensive LNG is pumped into their leaky gas networks and they are left holding the bag.
    Tax revenues as a percentage of GDP have not increased and are still among the lowest in the world.
    Loss making state owned enterprises have not been privatized. PSM and PIA remain on the government books and are regularly bailed out.

    I am certain the next government will have to go cap in hand to the IMF again. It’ll be the 4th IMF program in as many governments and the 13th since independence.Recommend

  • raider
    May 3, 2015 - 8:03PM

    economy is growing in documents as it used to grow during tenures of plmnRecommend

  • Adnan
    May 3, 2015 - 9:04PM

    Well, I am sceptical, this slight erection could be because of the Saudi and Chinese investments/loans…who knows, we need to look at it in 2018 if they really did something or the fat pocket had the loan money in it only, only time will tell! So, hold your horses lads!Recommend

  • reader
    May 3, 2015 - 10:26PM

    “Strong business culture and good roads”? Maybe in Islamabad, and Lahore, but not definitely in Karachi or anywhere else. Plz, establish military courts, then put this Zardari in jail ASAP.Recommend

  • raider
    May 3, 2015 - 11:47PM

    @sabi:
    we are not illiterate we know what is economy where gone it is right now, Musharraf received these types of appreciation on daily basis during his tenure, economy even grew @8% but was too fragile and cosmetically manipulated very like this oneRecommend

  • another reader
    May 3, 2015 - 11:48PM

    @reader:
    Karachi supports MQM so better go ask them about the progress of your city.Recommend

  • Saif
    May 4, 2015 - 12:00AM

    what a lie !Recommend

  • sabi
    May 4, 2015 - 12:30AM

    @Arqum:
    Dear,you as supporter of pti,is in no way considered the enemy but may I say gullible.
    Regards.Recommend

  • Ranjha
    May 4, 2015 - 12:48AM

    Anyone who has been reading the dud Economist knows well that these buffoons are the last to get anything right. They missed the dot com rally, then the cash, then the MBA disaster, then the Greek crisis.

    I use the Economist as a successful contrarian signal — when The Economist start to publish rosy stories about anything, take your money and run! It has made my firm hundreds of millions in profits for our clients and earned 2% plus commission for the investment team.

    Don’t say that you were not warned!Recommend

  • Muhammad Asim
    May 4, 2015 - 12:54AM

    Well-done. Analysis is good enough to over view Pakistan’s Economy. I just want to divert your attention to Balance of Payments and Trade Balance. Real Eco Growth need real productivity, industrial development and less import while more exports. What is life line in current Eco Growth, Oil Prices??? What will be happened when oil prices again jumped up? What about our agriculture sector? Cotton sector? IMF Debt is going up day by day…. German Debt is there too.
    Yes! sum of foreign investments, remittances and Oil bills are making our economy healthy and giving a good chance to Gov to take some fruitful steps for future stability and economic growth. Its time to go ahead and do what is best for economy. Recommend

  • Humza
    May 4, 2015 - 5:29AM

    @Kalaam: Whatver you may think, the reality is that the world thinks Pakistan is improving both in terms of security and economy. Give credit where it is due. Nawaz Sharif has shown the detractors what he can accomplish.Recommend

  • hamza khan
    May 4, 2015 - 7:02AM

    @Humza:

    NS or PML-N deserve no credit. the economy is folllowing a natural path of boom and bust, and is only recovering because of the hardworking pakistani worker and its corporate sector. what has the government done? no gas, no electricity, no water. they came into power with a rigged election, and have pursued their own kitchen cabinet type policies. the economy is suffering. we’re at 4% GDP growth. how is that successul. the economist must surely be smoking something.Recommend

  • Demolition Women
    May 4, 2015 - 8:25AM

    @Econ: Its especially telling that ease of doing business in Pakistan is quantum leaps above that in India. The trouble in India is that the bureaucrats there engage in endless quibbling and backtracking so that the end result is that nothing gets done or that if something does indeed happen it is at a glacial pace. Recommend

  • Malveros
    May 4, 2015 - 11:06AM

    @raider:
    Musharraf and Shaukat Aziz deliberately created an artificial economy. This is real growth that is coming now and the economy will take off under PML(N).Recommend

  • pervaiz
    May 4, 2015 - 2:09PM

    We should give credit to what deserves.. no matter here for PMLn or PTI………… Weldone PMRecommend

  • hassan
    May 4, 2015 - 3:06PM

    ha, ha US establishment openly supported nawaz shareef during dharna,now after formation of judicial commision they know NS in trouble. so they r funding these type of article to create their good image. but reality is pakistan is serious current account deficit,economy only growing at 3.4 % as compare to china 7% and india 6%. in musharraf tenure pak growing above 7 %.check the economic indicators in musharaf era, ppp era, pml n era. musharaf era was best, no difference between ppp and pml n era.i will not be surprised if there r more articles favouring pml n govt. best indicator is gdp growth rateRecommend

  • bajwa
    May 4, 2015 - 4:06PM

    Every Pakistani should firmly vow not to vote PPP again.Recommend

  • raider
    May 4, 2015 - 5:56PM

    @Malveros:
    dear i could be agree with you but how even it is different from Musharraf, whole economy is based on heavy borrowings, still no tax reforms, 400 billion drained out of the country in two years, one thing could give some relief to public in term of economics that is low oil prices but where is govt in this regardRecommend

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