|
|
Pakistan Business Forecast Report Q4 2008Published by: Business Monitor International Published: Jul. 28, 2008 - 54 Pages Table of Contents
AbstractScope For More TurbulenceThe transition from military to civilian rule has not been as smooth as hoped for, with dark cloudson both the political and economic horizon. The civilian government faces daunting challenges instabilising the wobbly economy, while trying to avert more suicide attacks and bloody showdownswith militants in tribal areas. The economy has been buffeted by rising oil and food prices over thepast year, resulting in a serious deterioration in the fiscal and current accounts. Unless these deficitsare reined in, and rampant inflation brought under control, there is a risk of yet worse economicdislocations. The government is counting on external support to help forestall a deeper crisis andby the looks of some friendly governments and multilateral institutions may come to their rescue. The high spirits that followed the return to civilian rule in March now seem a distant memory andin their place a sense of unease is slowly seeping in. A confluence of economic and political woesserves to cloud the political outlook in Pakistan in the second half of 008. The policymakingmachinery has been hobbled by ongoing wrangling between the governing coalition partners, thePakistan People’s Party (PPP) and the Pakistan Muslim League-N (PML-N), most notably withregard to the reinstatement of the Supreme Court judges sacked by President Prevez Musharraflast year - which was a precondition behind their coalescing. Unless a resolution to the presentimpasse is found it is not unthinkable that the ruling alliance will split, something that would bringmore instability. Brewing militancy in the country’s tribal border regions and souring relations withneighbouring countries are other key threats to the political outlook. Preliminary figures show the growth of the Pakistani economy slowed from 6.8% in FY06/07 (July-June), to 5.8% in the fiscal year just ended. Notably, manufacturing and agriculture stalled duringFY07/08, expanding by a paltry 5.4% and 1.5%, respectively. This contrasts with growth rates of8.2% and 3.7% in the preceding fiscal year. Overall industrial production decelerated from growthof 8.0% in FY06/07 to 4.6% in FY07/08. Meanwhile services have fared better, with growth tickingup to 8.2%, from 7.6% in the year prior. The outlook for the coming year has deteriorated inrecent months and we have consequently revised down our GDP growth forecasts for Pakistan. For the present fiscal year we envisage growth slowing to 5.5%, as opposed to our previous 6.7%projection. The business environment looks increasingly inhospitable under the current macroeconomic turbulenceand parlous security conditions. This is reflected in the contraction of foreign investmentover the past few months. Foreign portfolio investment shrunk by a massive 98.8% in FY07/08 onthe previous year. Other key hurdles enterprises are grappling with include rising borrowing costsand ongoing power shortages. The latter has stoked uncertainty and pushed up production costsfor many businesses, and a failure to address the supply-demand mismatch in power is likely tomean a continued loss of competitiveness, denting growth prospects. Get Full Details About This Report >> |
|
|||
|
About MarketResearch.com
|
||||