Friday, October 7, 2016

China-Pakistan Corridor to Add over 2 Million New Jobs in Pakistan

China-Pakistan Economic Corridor (CPEC) is expected to add over 2 million direct and indirect jobs to Pakistan's economy and boost the country's GDP growth rate to 7.5%.

Jobs & Economic Growth in Pakistan: 

US-based consulting firm Deloitte and Touche estimates that China-Pakistan Economic Corridor (CPEC) projects will create some 700,000 direct jobs during the period 2015–2030 and raise its GDP growth rate to 7.5%,  adding 2.5 percentage points to the country's current GDP growth rate of 5%.

Pakistan Country Report in Shamghai Business Review Feb/March 2016

An additional 1.4 million indirect jobs will be added in supply-chain and service sectors to support the projects.  An example of indirect jobs is the massive expansion in Pakistan's cement production that will increase annual production capacity from 45 million tons to 65 million tons, according to a tweet by Bloomberg's Faseeh Mangi. Other indirect jobs will be in sectors ranging from personal services to housing and transportation.

CPEC Benefits for Pakistan & China: 

The CPEC will open doors to immense economic opportunities not only to Pakistan but will physically connect China to its markets in Asia, Europe and beyond, according to the Deloitte report.

Almost 80% of the China’s oil is currently transported from the Middle East through the Strait of Malacca to Shanghai, (distance is almost 16,000 km and takes 2-3 months). With Gwadar port in Pakistan becoming operational, the distance would reduce to less than 5,000 km. If all goes well and on schedule, of the 21 agreements on energy– including gas, coal and solar energy– 14 will be able to provide up to 10,400 megawatts (MW) of energy by March 2018. According to China Daily, these projects would provide up to 16,400 MW of energy altogether.

India's War on CPEC: 

The biggest challenge that CPEC faces today is India's well-orchestrated effort to sabotage it. Not only are Indian leaders on record as opposing CPEC, the Indian Prime Minister Narendra Modi and his right-hand man Ajit Doval have unleashed a concerted effort to try to make it impossible.

Mr. Modi has openly expressed support for Baloch separatists and Ajit Doval has talked about Pakistan "losing Balochistan". A serving Indian Navy commander Kulbhushan Yadav has been arrested working undercover to wage covert war in Pakistan.

RAW Money Flow:

India has opened up a big money money spigot to use its agents to destabilize Pakistan. RK Yadav, an ex intelligence official of RAW, has in a TV interview (Siyasat Ki Baat with RK Yadav video 6:00 minutes), talked about RAW agents with "suitcases and cupboards full of money".

Ex RAW chief A.S. Dulat has said "money goes a long way" in intelligence operations.

Current National Security Advisor has talked about RAW recruiting terrorists with one-and-a-half times the money they are making from other sources.

RK Yadav has, in his book "Mission R&AW",  written about RAW money paid to late Pakistani politician Khan Abul Wali Khan in 1970s. He's also confirmed the existence of RAW-inspired 1960s Agartala Conspiracy that recruited Shaikh Mujib ur Rehman's Awami League to work for Indian intelligence.

More recently, London Police documents have revealed the testimony of MQM leaders Muhammad Anwar and Tariq Mir confirming that Altaf Husain received money from Indian intelligence.

Modi's Campaign to Isolate Pakistan:

While RAW is busy funding terror in Pakistan, the Indian Prime Minister Mr. Modi has launched a diplomatic offensive to have Pakistan declared a "state sponsor of terror". It's intended to deflect attention from Indian Army's brutality against innocent Kashmiris and to cover up his own proxy war of terror to sabotage CPEC in Pakistan.


China-Pakistan Economic Corridor is a game-changer for Pakistan. It will build power plants and other infrastrastructure, boost Pakistan's GDP growth to 7.5% and add millions of new jobs to bring prosperity to Pakistan. Indian Prime Minister Modi is very unhappy about it and he has launched a multi-pronged concerted effort to sabotage CPEC by using covert wars and diplomatic offensives to hurt Pakistan. Can Pakistan defeat Indian plans and succeed in building a prosperous future? That is the big question. The answer depends on how well Pakistanis can unite to make it happen.

Here's a video by Gaurav Garg explaining why India wants to sabotage CPEC:

Related Links:

Haq's Musings

Modi's Covert War in Pakistan

ADB Raises Pakistan GDP Growth Forecast

Gwadar as Hong Kong West

China-Pakistan Industrial Corridor

Indian Spy Kulbhushan Yadav's Confession

Ex Indian Spy Documents RAW Successes Against Pakistan

Saleem Safi of GeoTV on Gwadar

Pakistan FDI Soaring with Chinese Money for CPEC


Ahsan H. said...

India is orchestrating terrorist attacks in Baluchistanto sabotage the development
projects in Gwadar. CPEC doesn't sit well with the Indians.

Rafay said...

I am not sure how they calculated 2.5% growth in gdp. I think they are banking on the fact that the new electricity produced will be supplied to industry which will increase GDP. However, my understanding is that wapda national grid cannot take more than 15-000-16000 MW load because it hasnt been upgraded in 40 years.

As for the job creation figure I agree that direct indirect jobs will be around 2 million. However, it is estimated that around 2 million youth enters the pakistan job market every year so the entire CPEC will meet job demand of just 1 year. At the same time, CPEC will kill millions of jobs particularly export oriented jobs like textile once china starts dumping its goods in gwadar. In fact, given the corruption level in pakistan, i can see a lot of chinese goods meant for export via gwadar being sold in pakistan similar to how NATO containers went missing. Goods meant for afghanistan are openly being sold in quetta and peshawar including cars, electronics and guns.

We have examples of transit countries like egypt that has suez canal through which most sea trade takes place. Suez canal has been built for over 100 years but still 26% of the egyptian population lives below poverty line.

Riaz Haq said...

Rafay: "I am not sure how they calculated 2.5% growth in gdp."

Developing countries like Pakistan have a COR (Capital-Output-Ratio) of 4, meaning each 4% of GDP invested adds 1% GDP growth.

With additional 10% of GDP invested, Pakistan should see extra 2.5% GDP growth.

Rafay: "As for the job creation figure I agree that direct indirect jobs will be around 2 million. However, it is estimated that around 2 million youth enters the pakistan job market every year so the entire CPEC will meet job demand of just 1 year."

Pakistan economy growing at about 5% creates jobs today without CPEC. That job creation will continue.

Rafay: " We have examples of transit countries like egypt that has suez canal through which most sea trade t"

CPEC includes plans for many new industrial units in special economic zones to be built along the corridor. Chinese and other investors will invest when they see a competitive infrastructure in place to produce and export products from Pakistan.

An example of this is Haier Pakistan that is currently producing refrigerators, deep freezers, washing machines, home air conditioners, commercial air conditioners, television sets, microwave ovens and other small appliances in a special economic zone (SEZ) on the outskirts of Lahore.

Muhammad Anees said...

Riaz: Developing countries like Pakistan have a COR (Capital-Output-Ratio) of 4, meaning each 4% of GDP invested adds 1% GDP growth. With additional 10% of GDP invested, Pakistan should see extra 2.5% GDP growth.

Query: How can we develop such figure when 60 or more Percentage of our economic is informal and undocumented, population growth overtakes the economic activity and there is no documented macro economic model for Pakistan? Is this based on introspection from some other countries?

Riaz Haq said...

MA: "How can we develop such figure when 60 or more Percentage of our economic is informal and undocumented, population growth overtakes the economic activity and there is no documented macro economic model for Pakistan? Is this based on introspection from some other countries?"

There's plenty of macro and micro economic data available in Pakistan from both government and private sources.

Pakistan Bureau of Statistics (PBS), State Bank of Pakistan (SBP) and multiple industry groups regularly publish such data.

You can see it in Economic Survey of Pakistan (ESP) , Pakistan Living Standards Survey (PSLM), State Bank of Pakistan Quarterly reports, PAMA, APCM, APTMA reports, etc

There's a lot of history in Pakistan showing correlation between investment and GDP growth.

For example, domestic savings rate reached 18% of the GDP and foreign direct investment (FDI) hit a record level of $5.4 billion in 2007-8. This combination of domestic and foreign investments nearly tripled the size of the economy from $60 billion in 1999 to $170 billion in 2007, according to IMF. Exports nearly tripled from about $7 billion in 1999-2000 to $22 billion in 2007-2008, adding millions of more jobs. Pakistan was lifted from a poor, low-income country with per capita income of just $500 in 1999 to a middle-income country with per capita income exceeding $1000 in 2007.

The PPP government summed up General Musharraf's accomplishments well when it signed a 2008 Memorandum of Understanding with the International Monetary Fund which said:

"Pakistan's economy witnessed a major economic transformation in the last decade. The country's real GDP increased from $60 billion to $170 billion, with per capita income rising from under $500 to over $1000 during 2000-07". It further acknowledged that "the volume of international trade increased from $20 billion to nearly $60 billion. The improved macroeconomic performance enabled Pakistan to re-enter the international capital markets in the mid-2000s. Large capital inflows financed the current account deficit and contributed to an increase in gross official reserves to $14.3 billion at end-June 2007. Buoyant output growth, low inflation, and the government's social policies contributed to a reduction in poverty and improvement in many social indicators". (see MEFP, November 20, 2008, Para 1)

Muhammad Anees said...

Further queries.

As I am also player with the data and doing a bit of macroeconometrics research here, I find it very hard to get the same prediction using varieties of methods available and being applied by the IMF, World Bank and other agencies. This is why I asked for macroeconomic model so I can test if the data we commonly download from the sources as you mentioned, offers the same prediction as we expect.

Now, let me speak of the data itself, I guess you said, there is a positive correlation between Savings and FDI in Pakistan that has impulsed GDP positively. To me, using Data from World Bank on the same Savings, FDI and GDP, I see a negative correlation between Savings and FDI so how can they positively impact GDP to that extent. On the other hands, If I see the correlation between FDI and GDP over the same period, it becomes negative while Savings gives a positive correlation. Now, this finding from data and the predictiveness from your analysis, can I request if you use any Statistical method which can help me get the same results as you elaborated?


Riaz Haq said...

MA: "To me, using Data from World Bank on the same Savings, FDI and GDP, I see a negative correlation between Savings and FDI so how can they positively impact GDP to that extent. "

You have to look at the sum of domestic savings and FDI to see correlation between investment and GDP growth. It just makes common sense.

Counties such as China have enjoyed not only high domestic savings rates but also massive FDI inflows to drive rapid GDP growth since their economic reforms brought in by Deng Xiaoping in 1980s.

When you invest in energy and infrastructure projects and industries, you stimulate economic activity that results in higher GDP. That's what I see happening with CPEC in Pakistan.

Riaz Haq said...

The China-Pakistan Economic Corridor (CPEC) is an important consensus reached by the Chinese and Pakistani governments and of great significance in enhancing bilateral connectivity, improving people's livelihood and fostering pragmatic economic and trade cooperation.

"It was reported by an Urdu newspaper recently that the Chinese Ambassador to Pakistan informed Chief Minister Khyber Pakhtunkhwa and KP government that the western route doesn't exist in China-Pakistan Economic Corridor (CPEC). This is untrue," remarked a spokesperson in Chinese Embassy in a statement here on Wednesday.

He said China and Pakistan had put in place a sound mechanism of communication and coordination on the development of CPEC.

On November 12, 2015, the 5th meeting of Joint Cooperation Committee (JCC) of CPEC approved the principle of "one corridor with multiple passages", aiming at directly benefiting the socio-economic development of Pakistan, especially the western and north-western regions and providing effective connectivity to Gwadar Port, he added.

The spokesman said the Monographic Study of Transport Plan, approved in the 5th JCC, clearly mentions that Burhan-D.I.Khan-Quetta-Sorab section would provide much needed connectivity between major connection points of CPEC and would connect the western areas of Pakistan.

He said CPEC was for Pakistan as a whole and would bring benefits to all Pakistani people including people from the western parts.

With the joint efforts of both sides, CPEC projects are running well throughout Pakistan, and the CPEC is being comprehensively implemented. He said, CPEC projects in the western parts of Pakistan are making progress. A number of livelihood projects have also been implemented.

"We are committed to join hands with Pakistan to make continuous headway on the CPEC and deliver benefits to the people as early as possible," he added.

Muhammad Anees said...

Thanks for the insights. So if we could have converted both the Savings and FDI into positive correlation, our GDP could have gone multiple leaps if I presume from your observation on the on 4 investment to create GDP of 1 unit, the correlation between FDI and Savings when summed up is 0.86 which I can translate that both savings and FDI jointly increment by 4, the GDP should increase by 4(0.86) units. Then the understanding of your prediction becomes more complex.

To me, I think, the impact is translated to efficient macroeconomic governance, effective governance and corruption free system to boost investment. Yes, without proper planning and investment in education and health, the impact of CPEC might very low as compared to its potential to gauge it to benefits of such projects in advanced countries on a higher levels in literacy rates, technical education and governance indices.

Riaz Haq said...

#Russia Think Tank Analyst Andy Korybko: #India’s Hatred of #Pakistan Sabotaging North-South Corridor. #CPEC #China

Nobody could have expected that India’s Prime Minister would have used the occasion of celebrating his country’s 69th anniversary of independence to provocatively talk about the state of Baloch affairs in Pakistan. Modi went out of his way to say that some members of this ethnic group “thanked [him], have expressed gratitude, and expressed good wishes for [him]…expressed appreciation for Prime Minister of India, for 125 crore countrymen”. This was an obvious suggestion that the Pakistani Baloch have more loyalty to India and identify its citizens – and not Pakistan’s --- as their “countrymen”, which was a premeditated infowar attack meant to incite further discord within the country just a week after a suicide bomber killed dozens of members of this community in a high-profile attack. Modi’s surprisingly aggressive and very clear intimation that he supports Baloch separatism in Pakistan is bound to lead to a problem sooner than later in the Iranian province of Sistan and Baluchistan right next door, which just so happens to host the Indian-financed port of Chabahar that forms the crucial and irreplaceable terminal for the North-South Corridor. This presents a developing threat for Iran and Russia, both of which are depending on stability in and around Chabahar to ensure the long-term strategic viability of the ambitious transcontinental corridor that will eventually connect South Asia with Western Europe by means of their transit territory.

India’s Research and Analysis Wing (RAW), its version of the CIA, has been actively working to destabilize Balochistan for decades, and one of its key operatives was even caught in the region earlier this year and admitted to preparing terrorist attacks there. Despite India’s red-handed involvement in stirring up trouble in the province, New Delhi officially refused to admit that it had anything to do with events there, which makes Modi’s patently obvious appeal to Pakistani Baloch separatists all the more unexpected and totally contradictory to the country’s previous public stance on the issue. It’s unmistakable that the Indian “deep state” (permanent military-intelligence-diplomatic bureaucracy) intends to escalate tensions inside of Pakistan as ‘payback’ for the protests that have been rocking Indian-administered Kashmir for the past month and a half, and the country’s media is all too eager to assist, having gone overboard in their characteristic jingoism by even comparing Balochistan to Bangladesh. Modi and his subservient favor-currying media outlets thereby discredited all legitimate local grievances that the Baloch might have peacefully held against Islamabad, such as complaints about the lack of provincial infrastructure and the China-Pakistan Economic Corridor’s (CPEC) focus on Punjab, but resolving these issues was never India’s intention to begin with.

Riaz Haq said...

MA: "CPEC might very low as compared to its potential to gauge it to benefits of such projects in advanced countries on a higher levels in literacy rates, technical education and governance indices. "

I disagree.

Economies of advanced countries are slowing down in spite of higher investment levels.

Why? Because it takes capital AND LABOR to grow the economy.

Ruchir Sharma, the Indian-American author of "Rise and Fall of Nations" and head of Morgan Stanley's emerging markets, says the most important predictor of future growth is demographics.

Countries with a young and growing labor force have a much better chance of future economic growth and stability than anything else.

Pakistan is doing very well on this measure.

Pakistan's work force is over 60 million strong, according to the Federal Bureau of Statistics. With increasing female participation, the country's labor pool is rising at a rate of 3.5% a year, according to International Labor Organization.

Sharma addresses the question of Pakistan's low savings rate by saying "it's a chicken-or-egg issue: it's not at all clear which comes first, strong growth or high savings"

Rizwan said...

I love Pakistan, and want the best for it. But, nothing can bring economic revolution in Pakistan if we don't put our own house in order, starting with giving top priority to high caliber education, like Vietnam. We need to increase salaries of teachers to attract more qualified candidates, and improve teacher training programs as the first step. Btw, I am not a teacher, and I don't live in Pakistan. I

t has always been very hard to do business in Pakistan, and it remains so to this day. We need to streamline the process and cut out the red tape ( rishwat seeking middlemen) in order to make it easy to set up businesses in Pakistan.

We need to have an efficient justice system that operates without regard to money or status.

I don't see any of these happening real soon. So good luck. We will need it.

And you can already see the rapid growth of Vietnam, their education policies, teacher salaries, business environment. Just ask Professor Google. And they were destroyed by the Americans in the Vietnam war. Just ask Professor Google. Shame on us!

Rizwan said...

Pakistan's labor force, though young and rising, is mostly unskilled and illiterate, and unsuited for any contribution to serious industrial development.

Riaz Haq said...

Rizwan: "Pakistan's labor force, though young and rising, is mostly unskilled and illiterate, and unsuited for any contribution to serious industrial development. "

Pakistan's work force is much better educated today than it was in 60s and 70s when its economy grew much faster.

With half the population below 20 years and 60 per cent below 30 years, Pakistan is well-positioned to reap what is often described as "demographic dividend", with its workforce growing at a faster rate than total population. This trend is estimated to accelerate over several decades. Contrary to the oft-repeated talk of doom and gloom, average Pakistanis are now taking education more seriously than ever. Youth literacy is about 70% and growing, and young people are spending more time in schools and colleges to graduate at higher rates than their Indian counterparts in 15+ age group, according to a report on educational achievement by Harvard University researchers Robert Barro and Jong-Wha Lee. Vocational training is also getting increased focus since 2006 under National Vocational Training Commission (NAVTEC) with help from Germany, Japan, South Korea and the Netherlands and now China.

#Pakistan, #China discuss increased collaboration in #vocational #training & #education #CPEC

Pakistan and China have agreed to increase collaboration in the field of vocational education and teacher training programmes.

The agreement came during a meeting between a delegation from China’s Tianjin University of Technology and Education (TUTE) and National Vocational and Technical Training Commission (NAVTTC) Executive Director Zulfiqar Ahmad Cheema here on Monday.

Cheema briefed the delegation about the working of NAVTTC and its recent initiatives such as establishment of job placement centres for its graduates.

He said the under-construction China-Pakistan Economic Corridor (CPEC) would open new vistas of prosperity and development and would create employment opportunities in Pakistan.

Cheema said the two countries should enhance their collaboration to reboot the TVET system in Pakistan.

Muhammad Anees said...

Dear Riaz,

Now, see how much of the countries planning goes in favour of developing skilled labour, educated masses, transparant business environment, conducive real investment (not financial where I have once calculated in last twenty years, in Pakistan, stock market grew by 63 times and GDP by 6 times, in US the same ratio has been 1 to 1 for major markets like Dow Jones), healthcare and governance. With out such investment in demographics and human capital, how can I predict CPEC can help me boost my economy when it can be improved by 60 times more to deduce from above calculation?

Now to check your observation of unemployment statistic and labour force, I am sure, Pakistan will only recover its current status of industries closed down, while it should have been added new businesses (new business after closure of more than the potential new without assuming above investment in human capital, how can I predict the most desirable outcome? Dont you think Pakistan will be at the sub-optimal equillibrium from CPEC?

Now to see the status of vocational and skilled based education system, how much Pakistan can boost the current system? I think this will need more investment than CPEC to bring the VT and Quality of Education as a whole if we start today and bring the level competitive to Chinese Education. Rest, I am sure, we both can predict the difference between a productivity and creativeness (for entreprenurship) within the local graduates and foreign graduates in Pakistan?

Without impediments, prediction of the benefits becomes unrealistic though, I again and again claim on social media that CPEC is a Platinum Hen, Laying Platinum Eggs For Unending Life :). You can guess how optimistic I am for CPEC but when I calculate the hindrances in the way to its impact and non-serious planning beyond the projects itself, I dont realise the predictions will work better off.

Any further thoughts? Nice to discuss with you by the way.

Riaz Haq said...

MA: "I have once calculated in last twenty years, in Pakistan, stock market grew by 63 times and GDP by 6 times"

Pakistan's total market cap of just $80 billion is a fraction of its GDP nearing $300 billion.

And Pakistan's shares are still selling at a big discount in terms of average price-earnings ratio of just 9.7 while other major indices in emerging markets like India are trading at much higher PE ratios of 15 or more.

Pakistani shares have a lot more room to grow to catch up to valuations in other emerging markets.

Pakistanis are much better educated and more skilled than they were in 1960s and 1970s when Pakistan's GDP growth rate was much higher. I'm very optimistic about Pakistan's future growth prospects with new investments coming in.

Anonymous said...

Muhammad Anees said...

Dear Riaz,

I am thinking if the market capitalization is a component of GDP or not as I would then be seeing Pakistan's GDP to jump a few stairs upward. Unfortunately, my own calculations reveals that the transfer of resources from growth of the stock market to real investment and hence stimulating economic activity is (Stock Indices Growth: GDP) 63:6 ration compared to that of US as 10:10. This reveals stock markets weakly predict the economic growth in Pakistan.

Regarding Pakistani youth, a recent survey of employers revealed more than 75% of the youth is even not employable after graduations so I worry if the skillset you mention really an indicator to trust without keeping the employability. Yes, our youth is more talented but the outcome is not more than 50% of their potential.

Therefore, I argued that a mere cherishing of CPEC based expectation to transform the society/economy is a higher than optimism which makes the common people not celebrating the longer term benefits. This always happened in Pakistan and thus we hardly move up on the ladder of economic and social growth.

Riaz Haq said...

MA: "63:6 ration compared to that of US as 10:10."

Huge differences between US and Pakistan.

Pakistan's economy is a fast growing economy relative to the US economy.

Currently, US economy is growing at 2% while Pakistan's around 5%.

US stock market cap is 1.2X its GDP already. Pakistan's market cap is about a quarter of its GDP.

Pakistani shares trade at less than 10 times their earnings while those of US at 25 times earnings.

US stocks went through this growth phase in the decades after WWII. Pakistan's stocks (as well those in other emerging markets) are in that phase now. Pakistani companies listed on stock exchanges are growing much faster than US listed companies.

IN general, I disagree with your views and your calculations strongly based on my knowledge and years of experience dealing with the questions you are asking.

Anyway, good luck to you in your pursuit of econometrics.

Indian said...

How many of these economists and Riaz himself would dare to invest in Pak stocks.
My entire investments is only in American stocks, despite all the hype of BRICS.

Riaz Haq said...

Indian: "How many of these economists and Riaz himself would dare to invest in Pak stocks."

I am an investor in Pakistan ETF as are many people I know

Year-to-date, the Global X MSCI Pakistan ETF (PAK) has gained 21.7%, according to Barron's Asia.

If nobody was buying, PAK wouldn't be performing so well.

Riaz Haq said...

#Pakistan PM #NawazSharif rushes to end #energy shortages ahead of 2018 poll. #loadshedding #PMLN via @Reuters

Power supplies are not the only factor that will decide any poll. A further escalation in tensions with nuclear-armed rival India could destabilize the government, as could Islamist militant violence or street protests.

But Sharif has greater control over energy supply, and his government has spent billions of dollars building liquefied natural gas (LNG) plants, pipelines and dams, while private investors are financing wind and solar.

A major coal and two small nuclear plants are also due to come online before Sharif's term ends.

The power projects, coinciding with the biggest road building program in Pakistan's history, are central to Sharif's strategy to win the 2018 poll by promoting infrastructure as evidence of economic progress.

Pakistan's sputtering economy has rebounded in recent years, helped by lower global oil prices and improved security.

Chinese companies are arriving in force after Beijing outlined plans in 2014 to invest $46 billion in road, rail and energy infrastructure linking western China with Pakistan's Arabian Sea coast, with two-thirds of the money earmarked for energy.


The drive to boost generation above 17,000 megawatts (MW) and plug a 6,000 MW deficit has already yielded some results. Shortages in big cities, which two years ago went without power for 12 hours a day, are down to about six hours.

Sharif vowed last month that all scheduled outages would end before the next election, likely to be in May, 2018. His office said generation would hit 26,000 MW, a 3,000 MW surplus.

There are fears, including within Sharif's own ruling PML-N party, that the room for error has shrunk to zero and the ambitious targets could be missed, especially after two big hydro projects were delayed.

"There are a lot of moving parts with all these projects," said one Western diplomat in Islamabad. "The government has a comprehensive plan, but obviously there is some nervousness about the timelines."

Halting outages would breathe fresh life into Pakistan's economy, which needs to expand above 6 percent per year to absorb new entrants into the job market from a fast-growing population of 190 million people.

Economic growth hit 4.7 percent last July-June fiscal year, the fastest pace of expansion since 2008. Economists estimate energy shortages shave up to 2 percent off annual growth.

Some energy experts say Sharif's electricity goals are within reach.

The Asian Development Bank, lending Pakistan more than $1 billion to help alleviate the energy crisis, expects load shedding, or scheduled outages, will be eradicated by mid-2018.


Sharif's opponents, however, say the government is so fixated on boosting power generation that it has ignored reforms, like privatizing distribution companies, that would modernize the market and lower the cost of electricity.

Many Pakistani businesses complain about the price of power. Lahore barber Eijaz Ahmed, forced to down tools for several hours every day, fumes about spending up to 60 percent of his revenues on electricity.

"I cannot spend money on my children's education because I have to pay (expensive) electricity bills," he said, as his staff sat idle, waiting for power to return.

Riaz Haq said...

3 #Pakistan accelerators named among top 20 accelerators of #Asia & #Oceania. #startup #technology via @techjuicepk

Gust and Fundacity recently released their Annual Asian and Oceanian Accelerator Report 2015. Three accelerators from Pakistan were featured in the top 20 active accelerators in the region – who accelerated the most startups in the past year. LUMS Centre for Entrepreneurship, PlanX and Invest2Innovate made it to the list.

This year’s report is a follow-up to the report released in 2014 and its main objective is to understand how the accelerator industry has developed in the region, how accelerators are funded and monetized, while providing insights on the direction of the industry in the near future. The report includes some very thoroughly researched statistics for which over 125 organizations were surveyed in the Asia/Oceania region, out of which 54 qualified as accelerators.

According to the report, the region saw a total investment of US $16,842,427. Australia took the lead with US $5,620,000 in investment. Not far behind was India at US $3,981,000, followed by South Korea at US $1,960,460, and China at US $1,920,000. India, however, took the lead by accelerating 568 startups in the year 2015 alone.

Going by the number of accelerated startups, this news does sound good for Pakistan. However, there is still a lot of work that needs to be done. It all boils down to the issue of quality versus quantity. Right now, we have a lot of emerging startups but very few of them are targeting hot markets.

According to the survey, because of the global prominence of Fintech, Internet of Things, Health, and Education, these were the hottest markets Asian accelerators were most interested in. Apart from Health, the rest of the markets remain largely untapped by Pakistani startups. In order to understand this, compare the amount of investment raised by Pakistan’s 54 startups and that raised by China’s mere 13 startups. The need of the hours is to bring a focus towards emerging segments in order to attract international venture capitalists.

The report also featured some insights about how accelerators in the Asia and Oceania Region fund themselves in order to remain functional. 30% of accelerators reported that they either received a mix of private and public funding or were 100% publicly funded. When it comes to generating revenues, most of them, it appeared, invest a small amount in their incoming startups in exchange for some equity. 43% of Asian and Oceanian accelerators earn revenue from startup exits within the short-term (within 12 months), while 62% of them plan to earn revenue from startup exits over the long-term (12 months or longer).

Salim said...

Do you think Pakistan will benefit on free trade with India?

Riaz Haq said...

Salim: "Do you think Pakistan will benefit on free trade with India?"

It'll be good for Pakistani consumers in the short term because India can produce many things cheaper because of economies of scale.

But it'll hurt Pakistan's job creation in the long term because some companies may add capacity to their plants in India to export to Pakistan rather than set up plants in Pakistan.

Pakistan wants to promote domestic production to create jobs for its growing labor force.

Excerpt of Wall Street Journal interview with President of Yamaha Motors in Japan:

WSJ: What about in South Asia?

Mr. Yanagi: We want to expand business in Pakistan and Bangladesh as soon as possible. We had a production venture in Pakistan but we dissolved it five years ago. We are now planning to begin local production again, on our own this time.

In Bangladesh, we import motorcycles from our plant in India on a small scale, but we are studying now the best way of running operations because of rising tariff barrier there.

Since this interview was conducted in Oct 2013, Yamaha has set up a motorcycle plant that began production last year in Pakistan.

“The new investment from Yamaha will create jobs and bring new technologies,” said Yamaha Motor Company President Hiroyuki Yanagi, adding that, “Pakistan is all set to become one of the top global markets of motorcycles.

Muhammad Anees said...


Yes definitely. Pakistan has free trade movements with China, Sri Lank and Malaysia. You can see our trade has improved with these countries. There is always a benefit attached to the FTAs.

Anonymous said...

t'll be good for Pakistani consumers in the short term because India can produce many things cheaper because of economies of scale.

But it'll hurt Pakistan's job creation in the long term because some companies may add capacity to their plants in India to export to Pakistan rather than set up plants in Pakistan.

Pakistan wants to promote domestic production to create jobs for its growing labor force. +

So why are we importing cheap stuff from China then?

Rizwan said...

Riaz Sahib: You say "Youth literacy is about 70% and growing---". This does not jive with the Alif Ailaan report of 2015, which says, "by the higher-secondary level almost 85% are not in school" :

Riaz Haq said...

Anon: "So why are we importing cheap stuff from China then? "

Because China is also investing and creating jobs in Pakistan.

Haier Pakistan is currently producing refrigerators, deep freezers, washing machines, home air conditioners, commercial air conditioners, television sets, microwave ovens and other small appliances in a special economic zone (SEZ) on the outskirts of Lahore.

“Pakistan is one of eight countries around the world where the Chinese government plans to help its investors set up and operate SEZs, to use the country as a major base for manufacturing and exporting goods to the rest of the world. These zones have to be privately owned and operated,” said Afridi, who also heads the Haier-Ruba SEZ Company, according to Pakistan's Dawn newspaper.

Industrial parks and special economic zones are part of the China-Pakistan Economic Corridor memoranda of understanding agreed between the leaders of the two countries. The key pre-requisites for the establishment of these zones are resolution of the energy crisis and building of a competitive infrastructure in Pakistan.

The basic idea of an industrial corridor is to develop a sound industrial base, served by competitive infrastructure as a prerequisite for attracting investments into export oriented industries and manufacturing. Such industries have helped a succession of countries like Indonesia, Japan, Hong Kong, Malaysia, South Korea, Taiwan, China and now even Vietnam rise from low-cost manufacturing base to more advanced, high-end exports. As a country's labour gets too expensive to be used to produce low-value products, some poorer country takes over and starts the climb to prosperity.

Once completed, the Pak-China industrial corridor with a sound industrial base and competitive infrastructure combined with low labor costs is expected to draw growing FDI from manufacturers in many other countries looking for a low-cost location to build products for exports to rich OECD nations.

ATUL said...

What are your thoughts on the $90 billion Delhi Mumbai Industrial Corridor being built with a seed of $9 billion revolving fund jointly by Japan and India?

Riaz Haq said...

Atul: "What are your thoughts on the $90 billion Delhi Mumbai Industrial Corridor being built with a seed of $9 billion revolving fund jointly by Japan and India?"

I think it's a very good idea. It will be needed to support India's rapid urbanization over the next several decades.

However, it's a very ambitious project, so ambitious that some along the route are skeptical about it. Here's a quote from The Guardian:

“I think DMIC is a giant sandcastle, a mirage that we are being shown so land prices can be racked up,” says Babu Singh Patel, 66, a farmer in Kallibillod village, which adjoins Pithampur. “When Pithampur is a failed dream, how can we believe they will build dozens more Pithampurs? We think the DMIC will never happen.”

Riaz Haq said...

Rizwan: "You say "Youth literacy is about 70% and growing---". This does not jive with the Alif Ailaan report of 2015, which says, "by the higher-secondary level almost 85% are not in school"

So you think they are not literate because they drop out before reaching higher secondary level?

What kind of logic is that?

The fact is that the number of out-of-school children has be dropping over the last several decades.

Pakistanis are much better educated now than ever before.

As Bill Clinton likes to say: "Follow the trend lines, not the headlines".

NBRX said...

The DMIC will rest on the foundation of Dedicated Freight Corridor which is in progress. The Western section has been initiated by Tata and L&T

Ramesh said...

"It'll be good for Pakistani consumers in the short term because India can produce many things cheaper because of economies of scale. "


Free trade means Pak also have access to Indian market. So what stops Pak companies from achieving economies of scale by producing far more than they do to cater to joint P + I market.

Real reason is that, Pak will lose out to India in more lucrative areas like appliances, cars, buses, trucks, locomotives, rail cars where India is miles ahead of Pak in quality and manufacturing prowess. Some industries in Pak like apparel, processed food ( I love Pak made pickles) may prosper in joint market, but that will pale in front of what India can offer.

Riaz Haq said...

Ramesh: "So what stops Pak companies from achieving economies of scale by producing far more than they do to cater to joint P + I market. "

With free trade with India, Pakistani manufacturers will not have the built-in advantage of a much larger domestic protected market that Indian companies have enjoyed for decades.

Anonymous said...

Anon: "So why are we importing cheap stuff from China then? "

Because China is also investing and creating jobs in Pakistan.

So will Indian companies if Pakistan trades with India. India companies are already investing in Bangladesh.

Riaz Haq said...

Anon: "So will Indian companies if Pakistan trades with India. India companies are already investing in Bangladesh. "

Bangladesh is India's client state as long as it's led by Shaikh Hasina. Pakistan is not and will never be.

India regularly threatens war against Pakistan. Recently, the threats have included unilateral abrogation of Indus Water Treaty.

Modi and his ministers talk about "boli naheen goli (bullets, not talks), "munh tod jawab" (jaw-breaking response) and Modi's "chhapan inch ki chhati" (56 in chest)

It'd be foolish for Pakistan to accept investment from India under these circumstances.

Riaz Haq said...

#Pakistan’s economy: powering ahead with rising investments, improving security & stability. #CPEC @GlobalCapNews …

A frontier market that was flirting with insolvency just three years ago, is now in rude
health. Investment is flooding into Pakistan from China, the West and the Gulf, attracted by
high returns, rising stability and an economy underpinned by strong growth figures and a
pro­ business government.

Pakistan’s economy is on a tear, growing at its fastest pace since the bubble years of the mid­
2000s. According to projections from the International Monetary Fund, the economy is set to grow
by 5.0% in 2017, up from 4.7% in 2016 and 4.0% in 2015. Emerging markets­ focused investment
bank Renaissance Capital tips gross domestic product to expand by an average of 4.4% a year
over the four years to end­ 2017, against a median of 2.8% over the five years to end­n2013.
At every level, there are signs of marked improvements in one of South Asia’s most vibrant
markets. Global institutions, attracted by the high yields on offer, are snapping up Pakistan
securities listed at home and abroad.
China is pumping billions of dollars into vast infrastructure projects that will open up the country’s
northern borders, allowing locally made goods, from cotton and textiles, to raw and produced food
products, to potash and fertiliser, to be shipped overland, into Central Asia and Russia, and
Deepening markets
Pakistan’s efforts to widen and deepen its capital markets, and to foster the creation of an
innovative, knowledge­ based economy, are gaining traction. The country is rapidly becoming a key
provider of niche IT services, with upstart companies in Karachi and Lahore bursting with freelance
software coders, programmers, and application developers. The primary equity capital markets are
returning to action. An initial public offering completed in September by Loads Limited, saw the
auto parts maker raise $20m from local and foreign investors; more stock sales are expected in the
months ahead.

Riaz Haq said...

#Pakistan’s moment of opportunity Op Ed by visting #IMF Chief Chiristine Legard. #investment #debt #growth #exports …

In this mixed global environment, Pakistan cannot rely exclusively on its trading partners to support growth. This means that the country will have to lean on the strength of its own policies. Four priorities are central.

First, make the economy more resilient. With uncertain global prospects, the economy needs to prepare for potential shocks that may come down the road. At 65 percent of GDP, Pakistan’s public debt remains too high, with too many resources going toward interest payments instead of public investment, education, and other growth-enhancing areas. The task at hand is to continue improving public finances while accumulating international reserves. In parallel, social safety nets need further strengthening to protect the most vulnerable segments of society.

Second, raise growth. Pakistan can grow at faster rates than the current 4-5 percent per year. This will require higher investment and greater productivity growth. Public investment in infrastructure can help remove obstacles to economic activity, and the China Pakistan Economic Corridor is a very good opportunity. With careful management of its financing arrangements, it can be a transformative success. Yet, the private sector also needs to step up in strengthening economic prospects.

Today, private investment in Pakistan accounts for only 10 percent of the economy – much below the average of 18 percent for emerging markets. Completing energy sector reforms and improving governance and the business climate will be crucial to enable faster private sector growth.

Third, the quality of growth matters. Economic growth in itself is not enough unless its fruits are broadly shared among the population. Two dimensions are very close to my heart: education and gender issues. More than six million children of primary school age, including 3.5 million girls, are currently out of school. Higher spending on public education is clearly important, but so are improvements to the quality of education. The country needs to ensure access to opportunity for all segments of society and equip its people with the skills needed for tomorrow’s job market.

Similarly, with only a quarter of women participating in the labour force, Pakistan can add significantly to its growth potential by integrating women better into the economy. This will make growth not only more inclusive, but also higher. IMF studies have shown that closing the gender gap could boost Pakistan’s GDP by almost one third.

Finally, believe in the global system. Pakistan’s exports are only about a quarter of what they could be based on the experience of emerging markets. There is vast untapped potential to trade with neighbours and integrate into global value chains. A sustained focus on regional and international engagement can help realise this potential.

I am confident that Pakistan can seize this moment of opportunity and transform itself into a dynamic, vibrant, and integrated emerging market country. Over the coming years, a stable and vibrant economy that creates sustainable jobs and spreads the fruits of growth more widely can be a strong force for overall domestic stability. The same applies to trade and cross-border investments, which tend to bring people together in the pursuit of mutual economic advantages, and can provide a stabilizing force in the region.

Rizwan said...

Please see my previous comments on this post and your responses. Just recently, the ADB Outlook 2016 was released. Here is the link to the article but here is the quote of interest, “Low investment in human development has also left Pakistan with a workforce lacking the skills needed to help the country compete in global markets and to increase productivity by producing goods with higher value”, the report says. That is not much different from the sentiments I expressed earlier. We are doing better than before, but we SHOULD be doing a LOT better if we did things right. That is my only point. As it is, things have speeded up somewhat because of the CPEC shot-in-the-arm. I am cautiously optimistic, but what bothers me is that we always seem to be teetering on the edge of disaster- one step forward, two steps back. I would like t see some good analysis of what types of reforms we need in education and creating the right business atmosphere to speed up development in Pakistan. For example, what should we be doing to improve the level and quality of education in government schools, colleges and universities, and how? eg, fast track to improve teacher training, increase teacher salaries, increase student attendance, curriculum reform, etc. What can be done to improve the business climate for various industries? What can be done to make it easier to start a business? What policy changes need to be made to encourage the development of specific industries in Pakistan, eg chemical, pharmacology/drugs, industrial and manufacturing technology, machine tool industry (making machines that make machines), ceramics (not just tiles and dinnerware, but industrial ceramics), steel and metallurgy, household goods, electronics/electrical parts like capacitors, resistors, coils, transformers, silicon chips, food technology and food processing, etc., etc.. I mean the list is practically endless, and we are behind in everything, to varying degrees. We should be looking at what Korea did, because in the 50's they were poorer than us. In the 60's they studied us to see what we were doing right because of our rapid development in the early part of that decade, and look where they are now, and where we are.

Riaz Haq said...

Militants return to #Pakistan, hitting #China’s economic plans #CPEC #QuettaAttack

Quetta: A militant attack in Pakistan’s southwestern Balochistan province has shattered government claims it has been successful in its fight against terrorism.
Striking along the China-Pakistan Economic Corridor (CPEC) in Quetta, three armed men wearing suicide vests broke into a police academy late on Monday in a deadly assault that has since been claimed by the Daesh via a statement published on its Amaq news agency.
“These attacks are aimed at destabilising Balochistan and to create problems for CPEC, which certain countries don’t want to see as a success story,” said retired Brigadier Asad Munir, a defence analyst who served in Pakistan’s tribal regions.
Pakistan claims to have largely defeated militants who had wrecked the nation’s economy by violent strikes in past two years and killed thousands of people since the South Asian nuclear power joined the US war on terror in 2002.
But such brazen strikes indicate the battle is not over.

“The numbers and the way they were martyred, it has made all efforts of yours and security agencies futile,” Interior Minister Chaudhry Nisar Ali Khan told newly graduated police officers in Islamabad hours after the attack.
China’s reaction to the attack was low-key, suggesting its economic projects were not the target of the militant attack.
“It’s unrealistic to expect Pakistan’s domestic security situation to undergo fundamental changes in the near future,” said Zhao Gancheng, director of the Centre for South Asia Studies at the state-backed Shanghai Institutes for International Studies. “The attack on the police training academy last night was a reflection of Pakistan’s internal security risk; it happened in the province that the CPEC passes, but didn’t target the CPEC.”
China will cautiously push ahead with its projects and provide a boost in support for Pakistan’s military, he said.
The attack on the academy is the second worst in Pakistan this year, since a suicide bomber killed 70 people in Quetta’s government-run hospital in August.
Security authorities blamed Al Qaida-linked Lashkar-e-Jhangvi Al Alami for the attack, state-run radio reported citing Balochistan’s paramilitary force chief. By Tuesday afternoon, Daesh claimed responsibility.
The former security chief of Pakistan’s tribal regions, Mahmood Shah, cast doubt on the Daesh claims, saying Lashkar-e-Jhangvi Al Alami has a history of attacks in Balochistan and were trained by Al Qaida for urban fighting.
“The government has got to chalk out a new security plan for Quetta, Balochistan as militants keep coming and attacking it,” he said. “You want to have CPEC there and raising just a force isn’t enough.”
Prime Minister Nawaz Sharif, who aims to boost country’s economy to 7 per cent before his terms ends in 2018, condemned the attack and expressed concern over the safety of cadets.
Pakistan is banking on China’s $46 billion investment into the corridor that runs from China’s western part to Pakistan’s southwestern Balochistan to boost and develop the country’s economy.

Riaz Haq said...

Just went through this special report. The section o loans provides some useful information about the interest rates charged by Chinese

1- CPEC Fiber Optic Link (2%)
2- Orange Line (2.5%)
3- Gwadar's development (reduced to 0% from original 1.76%) on a loan 757Million USD
4- Energy projects financed at (5-6%)

more details on

Original Source: Shanghai Business Review Country Report on Pakistan Feb/March 2016

Riaz Haq said...

BRIEF-S&P raises #Pakistan sovereign credit rating to B from B- via @Reuters

Oct 31 S&P Global Ratings:

* S&P raises Pakistan sovereign credit rating to B from B-

* S&P on Pakistan - Improved macroeconomic stability has raised pakistan's growth prospects and bolstered its fiscal and external buffers

* S&P on Pakistan - Estimate Pakistan's GDP per capita to be US$1,500 in 2016

* S&P on Pakistan - Revised upward forecasts of average annual GDP growth to 5% over 2016-2019 from earlier estimate of 4.7%

* S&P on Pak- Rating reflects improved construction, services sector activity, low-cost oil,finance, high investment associated with China-Pak economic corridor

* S&P - Forecast Pakistan's gross general government debt to fall below 60% of GDP by 2018 Source text: (

Riaz Haq said...

Dailytimes | #CPEC to initiate flurry of economic activity in #Pakistan: #BASF - via @Shareaholic

The China-Pakistan Economic Corridor (CPEC) would help initiate a flurry of economic activity in Pakistan, said Tay Jui Seng, an official of the German Chemical giant - BASF.

Talking to the media along with Faisal Akhtar, the head of BASF Pakistan, Seng said he would report back to his company as to how the BASF can participate in spurring the business activities in the Pakistani market.

Tay Jui Seng, who is the Business Management Transportation Performance Materials Vice President for Asia Pacific, is based at BASF's manufacturing facility in Shanghai. He undertook a three-day visit to assess the market as well as the opportunities available in Pakistan.

Seng pointed out that the BASF has research facilities based in many countries of the world and has been coming up with innovative products from time to time through research and development (R&D). BASF was in a position to provide quick solutions to the requirements of the businesses in Pakistan, which is an emerging market, he added.

He stressed that Pakistan can also benefit a lot from its human resource especially by imparting right type of education and training to productive use of their talent, energy and potential.

Seng also indicated that the BASF regularly trains their people from time to time to enhance their technical skills and know-how to serve customers more efficiently. He said that his company could also consider as to how it can participate in the CPEC activities through the supply chain mode.

Seng also referred to the impressive growth of the automotive industry in Pakistan and especially in the two-wheelers market. He hinted that cooperation may also be extended by the BASF for the construction industry as well as in chemicals and polymers and also address the quick solutions that are required towards the growth phenomenon in Pakistan.

Faisal Akhtar on the occasion said that Tay Jui Seng's visit augurs well and indicates towards the company's interest for further collaboration in the growth process in Pakistan where the business environment is now quite conducive.

It may be pointed out that the BASF Chemicals and Polymers Pakistan Limited has changed its name to BASF Pakistan (Private) Limited effective from November 1, 2016. A communication said that the management under its new name assures all its customers of the same continuous commitment to support businesses with products and services.

Riaz Haq said...

#Pakistan #cement sales up 16% in October on #infrastructure development. #CPEC …

Cement sales rose 15.88 percent month-on-month in October due to a rise in infrastructure development in Pakistan; although its exports fell almost two percent in the same month on a declining share in the Afghanistan’s market, industry data showed on Monday.

The All Pakistan Cement Manufacturers Association (APCMA) data showed that domestic sales stood at 3.008 million tons in October, while exports were recorded at 0.518 million tons. Total cement dispatches stood at 3.527 million tons, depicting a growth of 12.87 percent month-on-month (MoM).

An association’s spokesperson said the industry’s capacity utilisation logged at more than 92 percent in October.

In October, exports to Afghanistan decreased 23.4 percent year-on-year (YoY) to 0.193 million tons. Exports to India increased 27 percent YoY to 0.110 million tons in the same month.

Despite Pakistan-India tension, the growth was surprising. The spokesperson, however, said the uptrend might not continue given the unabated border skirmishes.

Cement exports to India are mainly through Wagah border and southern coast of India.

The data showed that cement sales grew 11.26 percent in the first four months (July-Oct) of the 2015/16 fiscal year. Exports also increased 9.57 percent in the same period.

In July-Oct, exports to Afghanistan slid 11.74 percent, while those to India climbed 101.88 percent.

The industry official expressed concern over a sharp rise in coal prices, impacting the cost of production. Coal price, which stood at $54/ton in May, increased to $105/ton.

Manufacturers urged the government to take measures to boost the investment in real estate sector and housing construction.

Currently, the cement industry is mostly depending on infrastructure development projects.

“A sustained growth in housing construction is essential to absorb the additional capacities that would be operational in the next two years,” the official said.

Insight Securities, in one report, said the local cement industry unveiled 23 million tons of expansion plans with around $2.5 billion investment.

Alone Lucky Cement, the country’s leading cement producer, announced to raise its production capacity by 1.25 million tons. A Chinese firm is also mulling to entering the market through a possible acquisition, indicating a jump in output.

The officials said local cement makers are planning an expansion to retain the market share.

The $46-billion China-Pakistan Economic Corridor projects, comprising a wide range of infrastructure development, gave a rise to construction activities.

The growth in housing apartment constructions around the country also increased the cement intakes.

Riaz Haq said...

#IMF: #Pakistan's Glass Half Full …

Pakistan: Glass Half Full?
November 10, 2016

Successful program completion points to moment of opportunity
Significant challenges remain ahead
Close partnership to continue through policy dialogue and capacity building
Pakistan’s economy has stabilized from near-crisis circumstances and economic growth has gradually increased under the recently completed three-year economic reform program supported by a $6.15 billion arrangement under the IMF’s Extended Fund Facility.

In an interview, Harald Finger, IMF mission chief for Pakistan, talks about the state of the economy, the challenges ahead, and the next steps for Pakistan.

IMF News : On her recent visit, IMF chief Christine Lagarde spoke about a moment of opportunity for Pakistan. What has Pakistan accomplished over the course of the just completed program, and in what sense is there now such a window of opportunity?

Over the past three years, Pakistan has greatly strengthened the resilience of the economy and began making inroads towards addressing long-standing structural economic challenges. Not everything worked out fully as envisaged, of course, but it is important for us to recognize the program’s achievements. For instance, foreign exchange reserves have tripled, supported by foreign exchange purchases and external borrowing.

The fiscal deficit declined by 2½ percent of GDP (not counting a large payment to clear energy sector arrears just before the program started). This was made possible by removing untargeted energy subsidies that disproportionately benefited the affluent, significantly raising tax revenue through removing exemptions and concessions, and taking a more systematic approach to bringing various economic groups into the tax net.

These measures allowed for an increase in investment spending and social protection. Enrollment in the Benazir Income Support Program has increased by 1½ million families, and stipends were raised by more than 50 percent.

In the energy sector, power outages have gradually decreased and financial performance is strengthening. As a result, accumulation of arrears in the sector has also declined significantly, thereby relieving pressures on the budget. Increased independence of the State Bank of Pakistan has improved the monetary policy framework. A new comprehensive strategy to improve the business climate has been adopted and started to be implemented.

While there have been important achievements, the outlook for economic growth has also turned broadly favorable. Exports and agricultural output have been declining amid a more challenging external environment and appreciating real exchange rate. These are important causes for concern. But private credit growth has been recovering, and strong machinery imports, cement consumption, and gradually rising core inflation also point to firm domestic demand. Moreover, large-scale investment under the China Pakistan Economic Corridor is beginning to be implemented.

With the authorities’ accomplishments in strengthening the economy’s resilience and a broadly favorable outlook for growth, the IMF's Managing Director, Christine Lagarde, spoke of a moment of opportunity for Pakistan during her recent visit to Islamabad. She emphasized that now is the time for the country to continue its transition toward becoming a full-fledged emerging market by addressing the remaining challenges and implementing policies for higher and more inclusive growth.

Riaz Haq said...

#CPEC: Will #India Start War With #Pakistan And #China Over It? … via @ValueWalk

By Polina Tikhonova

With China and Pakistan actively working on the CPEC, the uptick of irresponsible propaganda pieces coming from politicians and analysts – originating mostly from India – shows no sign of going away.

Such an opinion was expressed by Panos Mourdoukoutas, a contributor for Forbes. Mourdoukoutas argues that China has to either appease India or “forget” about the CPEC project.

A number of Indian government officials have expressed their concerns over the CPEC since the project was announced over three years ago. And while India, as alleged by Pakistan, has made numerous attempts to disrupt the project, the chances that India might actually start a war with China and Pakistan over the project remain equal to zero.

In fact, former Indian Ambassador Melkulangara Bhadrakumar said India would “lose heavily” if it remained opposed and isolated from the CPEC.

However, numerous Indian government officials believe the CPEC is designed to undermine India’s position in the region and see the project as a threat to India’s interests.

While that creates tensions between China and Pakistan on one side, and India on the other, authors of anti-CPEC propaganda pieces seem unable to provide at least one legitimate reason as to why India would go to war with China and Pakistan over the project.

China would protect the CPEC at all costs as the project is worth a whopping $46 billion and is a game-changer for both China and Pakistan. Disrupting the project would mean a direct declaration of war to China and Pakistan. And India knows it.

This past summer, the China Institutes of Contemporary International Relations suggested that Beijing will have “to get involved” if New Delhi attempts to disrupt the project.


In his piece arguing that China is lagging behind India in terms of investments, Mourdoukoutas provides data that suggests India’s economic growth is set to outpace China.

Although India currently enjoys the rise of its economy, the country is becoming less attractive for investors in the long run. The reason? India is a “highly crowded trade,” as said by Herald van der Linde, head of Asia Pacific equity strategy at HSBC, in the bank’s Asia Equity Insights Quarterly.

“High fund holdings, premium valuations and slow pace of reforms make us reluctant to enter the market,” van der Linde wrote, adding that India’s earnings growth expectations are also slowing down.

Will India go to war with China and Pakistan over CPEC?

In his article, Mourdoukoutas also suggests that “if pro-Indian forces in Pakistan sabotage China’s CPEC route,” China should expect an open confrontation against India.

Mourdoukoutas also argues that it’s the reason why Beijing “should either appease New Delhi or forget about CPEC altogether.”

An open military confrontation between the world’s two most populous countries is very unlikely, especially considering the fact that India has already made several large-scale attempts to sabotage the CPEC.

Earlier this year, Pakistan alleged it had arrested a spy from India’s RAW, Kulbhushan Yadav. Islamabad believes that Yadav is responsible for hindering implementation of CPEC projects in Pakistan’s Balochistan province.