Sunday, January 1, 2017

Pakistan in 2016: Economy, Security & Relations With India, US

How was the year 2016 for Pakistan? What can Pakistan expect in 2017?

Did Pakistan’s internal security improve in 2016? If do, how? And by how much? How was it done? By Zarb e Azb military operation? Did Pakistan implement the National Action Plan to address extremism and radicalization in society?

Source: South Asia Terrorism Portal

How did Pakistan’s economy do? And how did the stock market do? Did improved security help? Did China Pakistan Economic Corridor (CPEC) investments help boost investor confidence in the country?

Source: Bloomberg

What caused deterioration in India-Pakistan ties? Was it the murder of Burhan Wani and India’s attempt to blame it on “cross-border terrorism” from Pakistan? Did Indian PM Modi succeed in isolating Pakistan?

How will Obama’s exit and Trump’s presidency affect US-Pakistan relations? Will these be as bad as under Obama? Or better? Or worse under Trump? How will Pakistan’s close ties with China and warming relations with Russia play into this?

Did the Obama administration initially condoned the rise of ISIS  in Syria as claimed by President-elect Donal Trump's national security advisor General Michael Flynn in an interview with Mehdi Hasan of Aljazeera? Will Russia-Turkey-Iran succeed in bringing peace to Syria?

Viewpoint From Overseas host Faraz Darvesh discusses these questions with panelists Misbah Azam and Riaz Haq (

Related Links:

Haq's Musings

Pakistan KSE100 Stock Index Among World's Top Performers

Obama's Parting Shot: New Sanctions on Pakistan NESCOM

700,000 Indian Soldiers vs 10 Million Kashmiris

Is Modi Succeeding in Isolating Pakistan? 

China Pakistan Economic Corridor: 2 Million New Jobs

Impact of Trump Appointments on US Policy

Pakistan-China-Russia vs India-US-Japan

Did the West Sow the Seeds of ISIS in Iraq and Syria?


Shams S. said...

As for "peace" in Karachi, according to Dawn editorial, the level of street crime is much higher now since MQM has been subdued and cannot effectively stop street crimes.

The economy has been f---- up in detail. Pakistan now owes China close to $40 billion in debt, plus another $20 billion in the offing. It will soon be a common site in Pakistan - The GDP growth rate is not hitting the minimum 5% increase that --- forget the good --- draws the bad from ugly.

Riaz Haq said...

Shams: "the level of street crime is much higher now since MQM has been subdued and cannot effectively stop street crimes."

Data from SATP and Numbeo is far more credible than any Karachi rag with a political agenda.

Both SATP & Numbeo show dramatic decline in terror and crime in Karachi over the last 3 years.

Karachi now ranks 31st among world's most dangerous cities, down from 11 in 2013.

South Asia Terrorism Portal (SATP) data on terrorism in Sindh:

Total Terror Deaths in Sindh:

254 in 2016, down from 607 in 2015, 1141 in 2014, 1625 in 2013

Bomb Blasts in Sindh:

12 in 2016, down from 19 in 2015, 62 in 2014, 97 in 2013

Suicide Bombings:

zero in 2016 down from 26 in 2015, 28 in 2014 and 16 in 2013

Sectarian Deaths in Sindh:

25 in 2016, down from 164 in 2015, 86 in 2014 and 122 in 2013.

Riaz Haq said...

#Pakistan #inflation eases to 3.70% in December 2016 with steep drop in prices of #chicken, #onions & #tomatoes.

Pakistan's annual inflation rate eased to 3.70 per cent in December from 3.81 per cent in November, the Bureau of Statistics said on Monday.

On a month-on-month basis, prices decreased by 0.68 per cent in December compared with November, the bureau said.

Average inflation for the July-December period stood at 3.88 per cent, compared with the same period last year.

The steepest rise in year-on-year prices was seen in the prices of gram flour and pulse gram. The steepest drop in year-on-year prices was in the price of onions, tomatoes and chicken.

Ravi Krishna said...

Market cap of Karachi SE : 75 USBD
Market cap of Mumbai SE : 1219 USBD

India manufacturers cars, buses, railway locomotives, steel, equipment for infrastructures etc. Pak can manufacture paad only.

Except for China, which is treating Pakistan like East India Company, who is interested in investing in Pak.

Riaz Haq said...

RK: "Market cap of Karachi SE : 75 USBD Market cap of Mumbai SE : 1219 USBD"

So, by your logic, size trumps performance? Right? In that case, why don't people always buy a Mack truck instead of a Porsche?

RK: "India manufacturers cars, buses, railway locomotives, steel, equipment for infrastructures etc. Pak can manufacture paad only."

Here's an excerpt of a piece by Indian entrepreneur Jaithirth Rao published by Indian Express:

"Uday Kotak said a few months back, in the course of an interview, that he was amazed that in his new office in Mumbai, not one of the furniture or fixture items were made in India. My friend Rahul Bhasin conducted a similar exercise in his office in Delhi and discovered pretty much the same thing. The carpet is from China, the furniture is from Malaysia, the light fixtures are from China, the glass partition is from all places, Jebel Ali in the Middle East and so on. Kotak went on to add that even Ganesha statues are no longer made in India. They are imported from China."

Do you know Pakistan manufactures aircraft being used by a dozen nations around the world?

Riaz Haq said...

For instance, auto sales in fiscal year 2016 have touched 217,679 units, an all-time high figure compared with previous best figures of 204,212 units in 2006-07 due to robust GDP growth rate and unprecedented auto financing from banks in Musharraf’s era.

The cement industry has gone in for capacity expansion from 44 million tons to 60 million tons within a couple of years to meet the massive rise in domestic demand due to China-Pakistan Economic Corridor (CPEC) and other public sector projects, said Chairman All Pakistan Cement Manufacturers Association (APCMA), Sayeed Tariq Saigol, here on Wednesday.

The APCMA Chairman said the rise in domestic demand has improved cement industry's capacity utilisation. However, he said suggestion by some quarters for the removal of import duty based on current trend would not be a wise decision.

Pakistan energy consumption rose 10.5% (India's 8.1%) in 2015

Ravi Krishna said...

Watch this.

This also tells that USA does not manufacturer anything and everything comes from China. So shall we assume that USA does not make planes, locomotives, trucks, buses, cars. You know you really can not debate anything.

Riaz Haq said...

RK: " This also tells that USA does not manufacturer anything and everything comes from China. So shall we assume that USA does not make planes, locomotives, trucks, buses, cars. You know you really can not debate anything."

Don;t compare India with US. Unlike India, the US creates almost everything others make.

And the United States' manufacturing value added per capita is over $5,400 and India's $168.

India's 3% share of the world's total manufacturing output puts it at a distant sixth position behind China's 24%, United States' 17%, Japan's 16%, Germany's 7% and South Korea's 4%.

The UNIDO data shows that India's manufacturing value added (MVA) per capita at constant 2005 prices increased from US$155.73 in 2005 to $168.42 in 2014. However, as percentage of GDP at constant 2005 prices in US$, India's MVA decreased from 15.10% in 2005 to 13.85% in 2014

UNIDO reports that Pakistan manufacturing value added (MVA) per capita at constant 2005 prices increased from US$135.03 in 2005 to $143.84 in 2014. Its MVA as percentage of GDP at constant 2005 prices in US$ decreased from 18.05% in 2005 to 17.41% in 2014.

Rashid A. said...

Chicago vs. Karachi

Chicago: 2016 Murders: 762
Chicago City Population: 2.7 M.
Chicago Metro Area Population: 9.5M.

Karachi: 2016 Murders: 593 in 11 months.
Estimate: 645 in entire 2016.
Karachi Population: Estimates: 18M-23M.

Karachi: 28-36
Chicago: 80

Chicago murder rate is 285% of Karachi!

Question: Is it safe to visit Chicago?
Should Pakistan issue a travel advisory for Pakistanis visiting USA?

Riaz Haq said...

#India in 2017: A graveyard of jobs? #Modi #AchchheDin #BJP via @dna @AntoJoseph

I belong to the pre-liberalisation kind whose middle-class dreams were woven around a five-digit monthly salary. By the time we managed to reach that ‘big-fat’ salary, probably a decade later - in early 2000’s, it had lost the glamour quotient. Dreams grew bigger to six digits, and then, seven digits. Many chased dollars and dinars in multi-national companies only to attain the seven-digit nirvana. A few nerds from India’s premier institutes marched their way to Google, Microsoft and the like, with seven-digit joining salaries, making several Indian CXOs salivate.

That is the story so far. The year 2017 but promises to deflate all those puffed dreams.

The IT sector, savior of Indian youth for two decades, is fast turning a graveyard of employment. Software engineers are as redundant as electricians and plumbers. There is a late realisation that India can’t blindly emulate the Chinese model of export-led growth on massive infrastructure and investments, amid the continuing global slowdown. Decelerating domestic demand has hit capacity utilization across several sectors in the country and inevitably, job creation. As per the government records, 1.35 lakh jobs created in India in 2015 was the lowest in seven years, much lower than 4.19 lakh in 2013 and 9 lakh in 2011. The slow rate at which India’s job market grows looks pretty scary, at a time when an increasing number of youngsters come out of professional colleges and scout for jobs.

India may soon lose its lure as a leading global market as unemployment spreads.

Since Narendra Modi-led government took charge in May 2014, job creation has been its top priority. Campaigns such as Make-in-India and Start-up India were meant to enhance the employment potential. But two years later, in June 2016, Modi was candid: “The middle class has its aspirations. We have to create jobs. How will job creation happen? Till I invest in the development of infrastructure, there will be no job creation.”

The media industry, which weathered even the global economic recession in 2008-09, is facing its toughest challenge in 2017. Everyone is a broadcaster on social media today, while reading as a habit is on a steady decline. TV journalism, fast replacing the reckless social media, has lost its narrative completely in the political cacophony. On the flip side, readers of newspapers are paying a heavy price as they refuse to pay for quality news, forcing newspapers to depend on advertising revenue for daily sustenance. As the economy takes a plunge, the fourth pillar of democracy, propped up by the generous India Inc, goes down on its knees. The printed word then merrily drowns in the political and corporate etiquettes.

Stock markets have ended 2016 in a smothered whimper. Leading stock brokerages, which predicted a huge jump at the start of 2016, are now hiding behind a `double whammy’: the interest rate hike in the US that left emerging markets reel in fund outflow, and the likely short-term economic slowdown in the wake of demonetization. The BSE Sensex, which gained as much as 30% in 2014 to close at 27499 on the Modi wave, has subsequently seen two dismal years. It ended at 26626 on December 30, much below the 2014-end level.

2017 offers too little options for the government. India’s huge workforce can’t be a force without work.

Anonymous said...

I think India has just become a neusense for Pakistan. Today’s Pakistan is looking into a brighter economic future. 2016 has proved many times over that India’s policy of isolating Pakistan has worked only with Afghanistan and BanglaDesh, this also will disappear in due course.
It is about time that we start putting our house in order and make sure every citizen gets access to education, health and a share in the upcoming prosperity of the country.

Anonymous said...

I think India has just become a neusense for Pakistan. Today’s Pakistan is looking into a brighter economic future. 2016 has proved many times over that India’s policy of isolating Pakistan has worked only with Afghanistan and BanglaDesh, this also will disappear in due course.
It is about time that we start putting our house in order and make sure every citizen gets access to education, health and a share in the upcoming prosperity of the country.

Riaz Haq said...

Zamir: " I think India has just become a neusense for Pakistan."

It seems that Sushil Aaron's op ed in Hindustan Times says something similar.

#India may matter less in the world during #Trump presidency. #Pakistan, #China #Russia #Asia

The diplomatic cover afforded by the Obama administration allowed the Modi government to focus its energies on isolating Pakistan internationally and get away with a heavy-handed policy in Kashmir – both policies that served to bolster the BJP domestically. Russia and China were relatively marginal to India’s diplomatic considerations, even though Delhi valued Moscow as a source of weapons and energy while the enhanced trade with China created a measure of interdependence that managed tensions. Delhi could choose not to participate in China’s ambitious One Belt One Road (OBOR) infrastructural initiative because the US, Western powers and Japan were envisaged as the primary sources of security, legitimacy and resources for India.

This entire calculus now stands upended. Trump is keen on dismantling the pillars of US foreign policy in a manner that makes the US’ political and bureaucratic machinery deeply uncomfortable. He wants to scale back American commitments abroad, he’d like to focus on an ‘America first’ policy and is expected to be explicitly transactional in his dealings with other countries. He has chosen a pro-Russian figure in Rex Tillerson as his Secretary of State and picked China hawk Peter Navarro to head the National Trade Council, leading many to anticipate serious tensions with China on trade issues.

Some in Delhi may believe that an aggressive US that counters an assertive China works for India. But policymakers will know that it is one thing to play geopolitical chess in peace time, i.e. strengthen regional partnerships to counter a rising power, and quite another being on the cusp of a US-China conflict in Asia and having to choose sides. It’s not clear if such developments will materialise soon, but the scene of global politics will move to great power dynamics between US, Russia and China. India will be peripheral to the concerns of all three for different reasons.

As far as the US is concerned, it is not clear how much attention Trump will devote to India while he is preoccupied with the inevitable domestic turbulence his presidency will generate and the resetting of ties with Russia and China. India’s leverage abroad now appears to depend on the Washington security establishment’s ability to normalise Trump and make him aware of Delhi’s utility to American strategy in Asia. But that establishment itself will take time recovering and coping with the changes he wants and India as a priority could slip in the process. Trump did not mention India in his foreign policy speech on April 27, 2016 and it is not clear if he has any definite ideas as to what to do with the relationship.

Riaz Haq said...

#Pakistan violence drops significantly in 2016: Report

Deaths linked to violence in Pakistan decreased significantly in 2016, dropping 45 per cent compared with the previous year, a report released Tuesday said.

About 2,610 people lost their lives due to violence during the period compared with 4,647 in 2015, according to research by the Islamabad-based think tank, the Centre for Research and Security Studies (CRSS).

"There was nearly a 45 per cent reduction in the number of violence-related fatalities in 2016, which continued the trend of reduction from 2014," the report said. "In fact, since 2014, there has been an overall reduction of nearly 66 per cent."

It added that December was the least violent month for the country during the year.

Pakistan's army launched an operation in June 2014 to wipe out militant bases in northwestern tribal areas and bring an end to a bloody insurgency that has cost thousands of civilian lives since 2004. It has involved a series of military offensives as well as concerted efforts to block the militants' sources of funding.

Last year, the country recorded its lowest number of killings since 2007 when the Pakistani Taliban was formed. But the remnants of militant groups are still able to carry out periodic bloody attacks.

According to the CRSS report, the two provinces of central Punjab and southwestern Baluchistan had a marginal increase in violence during 2016.

Baluchistan suffered the most fatalities as violence-related deaths rose from 719 in 2015 to 798 last year, an upsurge of nearly 10 percent, followed by central Punjab which lost 424 people during 2016 - the highest number of fatalities in the province during the last four years.

Both provinces were the targets of suicide attacks that increased the casualty count. Baluchistan had three suicide attacks, leaving 186 dead, while Punjab had one suicide attack at a park crowded with families on Easter Sunday, killing 75 including many children.

Riaz Haq said...

The “Crises of Room”—Robert Kaplan
January 2, 2017 | Filed under: Security and tagged with: Afghanistan, bombs falling on Gaza, Indian Ocean, social media, West Bank

While the Americans and Europeans focus on globalization, the appeal of nationalism and military power is growing in Eurasia. Missile and bomb tests, biological warfare programs, and the development of chemical weapons are “the products of a prosperous, liberalizing Asia,” Bracken notes. What the West has “failed to recognize” is that the technologies of war and wealth creation have always been closely connected: from Asia’s economic rise has come its military rise. In the early Cold War years, Asian military forces were primarily lumbering, World War II–type armies whose primary purpose, though never stated, was national consolidation.........

But as national wealth accumulated and the computer revolution took hold, Asian militaries from the oil-rich Middle East to the tiger economies of the Pacific developed full-fledged, military-civilian post-industrial complexes, with missiles and fiber optics and cellular phones. ..........

An unbroken belt of countries from Israel to North Korea (including Syria, Iran, Pakistan, India, and China) has assembled either nuclear or chemical arsenals and is developing ballistic missiles. A multipolar balance of terror stretches over a 6,000-mile arc, cutting across military and political theaters and regional studies departments into which the West divides up Asia. The “death of distance” is upon us, Bracken warns. Take Japan, which ever since North Korea in 1998 fired a missile across it, landing in the Pacific Ocean, is no longer a zone of sanctuary, but an integral part of mainland Asia military space, despite its archipelagic geography.....

China, North Korea, India, Pakistan, and other countries are developing disruptive technologies. In an age of former Third World countries acquiring tactical nuclear weapons, large forward bases like the kind the U.S. military maintained in Saudi Arabia and Kuwait prior to the two Gulf wars may henceforth be vulnerable to enemy attack. Such a development promises to hinder America’s projection of power around the Eurasian rimland, and thus pave the way toward a more unstable, multipolar power arrangement......

Bracken warns that nationalism is “dangerously underrated” by Western observers, who see it as part of a retrograde past that economic and social progress moves us beyond. “The most important issue of the twenty-first century is understanding how nationalism combines with the newly destructive technologies appearing in Asia.” As I’ve said, the new nuclear powers, like Pakistan, India, and China, will have poor and lower-middle-class populations, and this will abet a resentful, hot-blooded nationalism in an age when the new military symbols are not armies but missiles and nuclear weapons—the latest totemic objects of the crowd....

Understanding the map of the twenty-first century means accepting grave contradictions. For while some states become militarily stronger, armed with weapons of mass destruction, others, especially in the Greater Middle East, weaken: they spawn substate armies, tied to specific geographies with all of the cultural and religious tradition which that entails, thus they fight better than state armies on the same territory ever could. Southern Lebanon’s Hezbollah, the former Tamil Tigers of northern Sri Lanka, the Maoist Naxalites in eastern and central India, the various pro-Taliban and other Pushtun tribal groupings in northwestern Pakistan, the Taliban itself in Afghanistan, and the plethora of militias in Iraq, especially during the civil war of 2006–2007, are examples of this trend of terrain-specific substate land forces.

Riaz Haq said...

As #India Lags, The #Pakistan #ETF NYSE:PAK Is At All-Time Highs

From Zacks: For investors seeking momentum, MSCI Pakistan ETF (PAK – Free Report) is probably on their radar now. The fund just hit a 52-week high and is up about 50.2% from its 52-week low price of $12.00/share.

But are more gains in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea on where it might be headed:

PAK in Focus

This product offers exposure to the large and liquid companies in Pakistan by tracking the MSCI All Pakistan Select 25/50 Index. Financials, materials and energy are the top three sectors of the fund with double-digit weight each. The fund charges 0.68% in expense ratio (see: Broad Emerging Market ETFs).

Why the Move?

This Pakistan ETF has been picking up momentum lately on improved capital mobility and liquidity. The country has been working on a turnaround. The country’s economy is growing at a decent rate of approximately 4.5% per annum. The country’s young population could act as a key catalyst to long-term growth.

More Gains Ahead?

It seems that PAK might continue with its strength given a high weighted alpha of 44.10%. As a result, there is definitely still some promise for risk-aggressive investors who want to ride on this surging ETF.

Global X MSCI Pakistan ETF (NYSE:PAK) was trading at $17.96 per share on Thursday morning, down $0.06 (-0.33%). Year-to-date, PAK has gained 2.63%, versus a 1.30% rise in the benchmark S&P 500 index during the same period.

PAK currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #11 of 77 ETFs in the Emerging Markets Equities ETFs category.

Riaz Haq said...

110 #journalists killed in 2015, #India among 3 most dangerous nations. #Pakistan not on danger list via @htTweets

India was among the three most dangerous countries for journalists in 2015, with nine reporters losing their lives during the year, according to the annual report of Reporters Without Borders released on Tuesday.

The media watchdog said these deaths confirmed “India’s position as Asia’s deadliest country for media personnel, ahead of both Pakistan and Afghanistan”.

Only war-torn Iraq and Syria recorded the deaths of more journalists than India. Four of the nine Indian journalists murdered in the past year were killed “for still undetermined reasons”, Reporters Without Borders (RSF) said.

Besides India, the eight other countries where the most journalists were killed are Iraq (11), Syria (10), France (eight), Yemen (eight), Mexico (eight), South Sudan (seven), the Philippines (seven) and Honduras (seven).

A total of 110 journalists were killed in connection with their work or for unclear reasons in 2015, and at least 67 were killed while reporting or because of their work.

“These 67 deaths bring to 787 the total number of journalists killed in connection with their work since 2005,” RSF said in its report.

Indian journalists “daring to cover organised crime and its links with politicians have been exposed to a surge in violence, especially violence of criminal origin, since the start of 2015”, the report said.

Two murders monitored by RSF were linked to illegal mining, a sensitive environmental subject in India. “The inadequacy of the Indian authorities’ response is reinforcing the climate of impunity for violence against journalists,” RSF said.

“After the murder of Sandeep Kothari (the eighth journalist to be killed for work-related reasons in two years), RSF urged the government to establish a national plan for protecting journalists. A response that matches the scale of the threats to journalists is now essential,” it added.

Kothari, a 40-year-old tehsil correspondent for several Jabalpur-based Hindi dailies, belonged to Balaghat district of Madhya Pradesh. He had filed a case against some people to expose the region’s sand mining mafia. His charred body was found at a Nagpur farmhouse on June 21.

While 67 journalists were targeted worldwide because of their work or killed while reporting, RSF said it had not been possible to clearly establish the circumstances or motives of 43 other deaths. Twenty-seven citizen-journalists and seven media workers were also killed in 2015.

Riaz Haq said...

Nestle #Pakistan' Swiss chief says country's #economy poised for rapid accelerating growthé-MD-sees-Pakistan-in-hot-zone-of-high-economic-activity …

Anticipating bright prospects for industry, local head of the global food giant has said that Pakistan seems poised to enter high economic activity ‘hot zone’, potentially moving to post double-digit growth.

“With increasing per capita income, gradual improvement in economic growth, better law and order situation, easing energy crisis, political stability, exponential gains in equity market, massive infrastructural development under China-Pakistan Economic Corridor (CPEC) and other favourable indicators, we are hopeful of entering the hot zone, which tends to open new vistas of robust growth for food and other industries," said Bruno Olierhoek, Managing Director and Chief Executive Officer of Nestlé Pakistan.

Having over Rs 100 billion of turnover, Nestlé Pakistan is one of the leading companies operating in Pakistan and performance of food giant has frequently been referred as a success story at various forums.

Sharing his forward-looking view in an exclusive talk with The News, Olierhoek said,” The local and foreign companies have already started taking interest in expanding their investment in view of the emerging developments.”

“Apart from macroeconomic stability, roads and other infrastructural development, under the CPEC, will greatly improve access to remote areas of Balochistan and other provinces, leading to greater economic activity. The industry is also expecting huge benefits from power projects being constructed as major component of CPEC.”

Olierhoek said the Nestlé Pakistan is optimistic about power shortages coming to an end as well as reduction in the cost of energy, which will eventually cut business cost.

Pledging long term commitment of his company, Olierhoek said, “Nestlé Pakistan attaches great importance to local market that offers limitless resources and possibilities.”

“Having an emerging middle class, a substantial young population and increasingly health conscious people, Pakistan looks eager to offer market penetration after evolving into a hotspot for investment,” he said suggesting the establishment/enforcement of a National Quality Council to ensure uniform standards throughout the country and to further aid investment for food companies.

James Elan said...

It is difficult to accept all your economic and social sugar coated narratives when the Fragile State Index still lists Pakistan among the top 15 in 2016. A broad index much like the HDI which categorizes Pakistan under Low Human Development.

Riaz Haq said...

JE: "It is difficult to accept all your economic and social sugar coated narratives "

What I have shared in my post is not "sugar coated narratives ". To the contrary, it's hard data from credible sources.

Riaz Haq said...

#Terrorism data trackers report big decline in #Pakistan violence: 28% fewer incidents, 45% fewer deaths in 2016.

Two Pakistani research groups have noted that the country saw a significant drop in militant violence last year, crediting the military for the decrease in attacks.

The two Islamabad-based groups say that large-scale military operations in the lawless tribal regions bordering Afghanistan, in the chaotic port city of Karachi and the sparsely populated Baluchistan province are behind the drop. But for the trend to continue, they say, authorities need to disband sectarian and anti-Indian extremists based in the populous Punjab province.

The findings, which are based on the groups' records, were released last week and on Sunday.

One of the groups, the Center for Research and Security Studies, said there was a 45 percent drop in violence-related deaths in 2016, compared to the previous year. The Pakistan Institute for Peace Studies, which tallies violent incidents, registered a 28 percent drop in attacks in 2016, compared to 2015.

Still, both organizations tempered the findings by warning that the trend could be halted unless militant groups are disbanded and called for improving relations with neighboring India and Afghanistan.

Prime Minister Nawaz Sharif echoed some of those sentiments last week, when he told a writers' conference that Pakistan needs to create an effective narrative that promotes tolerance.

"We are forgetting how to speak of mutual love, integrity, compassion and empathy," he said. His government introduced legislation in 2016 outlawing hate speech and denying clerics from rival Islamic sects the right to use their loudspeakers at their mosques.

However, Sharif's government has not succeeded in disbanding outlawed sectarian groups that re-emerge later under a different name.

Also, lawmakers from his own Pakistan Muslim League have been seen on campaign platforms with members of the outlawed Sunni extremist group Sipah-e-Sahabah, which has links to the banned Lashkar-e-Jhangvi, another violent Sunni extremist group that has been blamed for several attacks last year, particularly in southwestern Baluchistan.

"A government that is going into an election next year doesn't want to lose votes," said Imtiaz Gul, executive director of the Center for Research and Security Studies, which authored one of the reports. "The banned outfits have madrassas that still operate, they have sympathies and influence."

A mostly Sunni Muslim country, Pakistan has for years been convulsed by brutal sectarian violence that has killed thousands. Most of the victims have been minority Shiite Muslims.

Asadullah Khan, an analyst with Pakistan's Institute of Strategic Studies says that "it isn't enough to ban" militant groups, which then surface under a new name.

"We have to get rid of them altogether," Khan said.

Prominent on the militant landscape dotting Pakistan are also the Afghan Taliban, Pakistan's own Taliban group and its splinters, as well as the feared Haqqani network. Then there are several anti-Indian groups, labelled terrorists by the United States and India — such as Lashkar-e-Taiba, which was banned but remerged as Jamaat-ud-Daawa and Jaish-e-Mohammed.

Pakistan has fought three wars with archrival India, most often over the disputed Himalayan region of Kashmir.

Riaz Haq said...

#Pakistan Beats #India using its strategic geographic location to extract benefits from #America and #China. @forbes

After beating India in equity markets, Pakistan beat India in another metric recently: Geopolitics.

The country's leaders have skillfully leveraged Pakistan's strategic geographic location to extract a series of benefits from America and China.

In fact, the performance of Pakistan's equity markets and geopolitics isn’t reflective of their independence from each other. Geopolitics has been, and will be, a major driver for the country's financial markets.

Back in 2001, Pakistan leveraged its proximity to Afghanistan to extract a big benefit from America: a write off for a big part of its foreign debt--the spark of Pakistan's fifteen-year bull market.

America needed Pakistan as an ally in its war against Afghanistan. And Pakistan's leadership offered to do just that in exchange for the US brokering debt relief for their large external debt - 60 percent of the country’s GDP, with debt serving counting for 30 percent of exports.

“A unilateral default seemed almost inevitable,” writes Marko Dimitrijevic in Frontier Investor (New York: Columbia Business School, 2017). “However, the United States’ post-9/11 collaboration with the Musharraf government to fight terrorism provided an environment conducive for Pakistan to request the rescheduling of its debt.”

Indeed, in December 2001, the Paris club did just that, cutting Pakistan’s debt by $12 billion, with IMF providing the country additional funding.

The rest is history. Pakistan’s currency strengthened as foreign expatriate remittances and foreign capital flowed into the country, with a good chunk of it ending in financial markets -- which took off, until the 2008-9 financial crisis.

Then China came along to re-ignite Pakistan’s market, once again.

Beijing needed a western route to the Middle East, and Africa--China's second continent. Ideologically that is, which can explain why Beijing committed $46 billion to China-Pakistan Economic Corridor (CPEC). In addition, China has been investing in Pakistan’s infrastructure companies.

In a sense, Pakistan’s gain is India’s loss, as China cannot appease both countries at the same time. In fact, it has done quite the opposite: repeatedly blocking India's efforts to join the Nuclear Supplier Group (NSG).

And it has sided openly with Pakistan in the India-Pakistan Kashmir impasse, as evidenced by statements by China’s senior officials on the sidelines of the ongoing 71st session of United Nations General Assembly in New York, as previously discussed in a piece here.

Riaz Haq said...

#Pakistan predicted to be world’s fastest-growing #Muslim #economy in 2017

Pakistan has been forecasted to be the world’s fastest-growing Muslim economy in 2017 ahead of Indonesia, Malaysia, Turkey and Egypt, according to London’s The Economist magazine.

Pakistan’s estimated GDP growth – 5.3% – is also ahead of 4% GDP growth of Israel. This makes Pakistan world’s fifth fastest-growing economy in the world, only behind India and China and two other countries.

The live data, which is updated twice-daily, is published on The Economist website in the form of an interactive table of economic and financial indicators. This data reinforces a Harvard University study which predicted Pakistan to grow by more than 5% in the next decade.

The 2017 forecast of 5.3% growth is, however, lower than the 2016’s 5.7% forecasted growth rate, which means Finance Minister Ishaq Dar must take steps to put economy on the path of irreversible growth.

In 2014, The Economist had forecasted Pakistan to be world’s sixth fastest-growing country.

The 2017 forecast of 5.3% growth is, however, lower than the 2016’s 5.7% forecasted growth rate, which means Finance Minister Ishaq Dar must take steps to put economy on the path of irreversible growth.

In 2014, The Economist had forecasted Pakistan to be world’s sixth fastest-growing country.

Riaz Haq said...

#Remittances to #Pakistan $9.46 bn in July-Dec 2016, down 2.37% in 1st half FY17. $1.58 bn in Dec, 16, down 2%.

KARACHI: Overseas Pakistanis sent home $9.46 billion in the first half of 2016-17, down 2.37 per cent from a year ago.

According to data released by the State Bank of Pakistan (SBP) on Tuesday, remittances received in December alone amounted to $1.58bn, which reflects a decline of 2pc on both monthly and annual bases.

Remittances provide the current account balance with critical support. Inflows from overseas increased 6.4pc year-on-year to almost $20bn in 2015-16. But growth in remittances turned negative in the beginning of the current fiscal year, with the transfer of funds from the Gulf region, United States and United Kingdom registering notable declines.

The central bank has dubbed the subdued growth in remittances “the new normal”.

Over one-fourth of remittances received during the six months originated from Saudi Arabia. Inflows from Pakistani workers based in the oil-rich nation in July-Dec amounted to $2.73bn, down 5.5pc from a year ago.

The second-largest contribution to remittances was from workers based in the United Arab Emirates. They sent home $2.12bn, although the figure is 2.5pc smaller than the funds received in the same six months of the preceding year.

Remittances sent by workers based in the United States declined 10.8pc year-on-year to $1.16bn. The transfer of funds from UK-based workers remained $1.1bn, down 12.5pc from a year ago. These two countries – along with six Gulf nations, namely Saudi Arabia, UAE, Bahrain, Kuwait, Qatar and Oman — form the main corridor of remittances.

In a recent publication, the SBP blamed low international oil prices and the tightening of US-backed anti-money laundering/anti-terrorist financing laws for global correspondent banking, which is at the centre of the global remittance transfer business, for the recent disruption in the flow of funds from overseas.

As for remittances from the United Kingdom, the central bank noted the “sizable depreciation” in the British currency post-Brexit means inflows from the European nation will be lower in dollar terms even if Pakistani workers keep sending the same amount.

With regard to the decline in remittances from the Gulf countries, the SBP believes the effects of fiscal consolidation in oil-rich nations are becoming visible on the pattern of fund transfers.

Limited construction activities in the Gulf region are likely to leave a long-term impact on remittances sent by Pakistani workers. Data shows the gross number of Pakistanis who went to the Gulf countries declined 16.4pc in July-Sept last year on an annual basis.

The restrained fiscal spending in the Arab world is expected to dampen demand for low-skilled labourers, according to the SBP, whereas the “localisation requirements” will limit opportunities for high-skilled migrants.

Riaz Haq said...

#WorldBank raises #Pakistan’s #GDP growth forecast to 5.2% in FY17, 5.5% in 2018 and 5.8% in 2019

ISLAMABAD: The World Bank has revised Pakistan’s growth rate upwards to 5.2% for fiscal year 2017 and 5.5% for 2018.

It previously estimated growth in Pakistan’s gross domestic product (GDP) at 5% and 5.4% for FY17 and FY18, respectively.

The report ‘Global Economic Prospects; weak investment in uncertain times’, states that the uptake in activity is spurred by a combination of low commodity prices, increasing infrastructure spending, and reforms that lifted domestic demand and improved the business climate.

In Pakistan, growth is forecast to accelerate from 5.5% in fiscal year 2018 to 5.8% in fiscal year 2019-20, reflecting improvements in agriculture, infrastructure, energy and external demand.

The report further mentioned the successful conclusion of the IMF Extended Fund Facility (EFF), aimed at supporting reforms and reducing fiscal and external sector vulnerabilities, lifted consumer and investor confidence.

The China-Pakistan Economic Corridor (CPEC) project is also tipped to increase investment in the medium-term, and alleviate transportation bottlenecks and electricity shortages.

Earlier in November, whilst releasing its report ‘Pakistan Development Update – Making growth matter’ the World Bank had projected Pakistan’s economy to grow at 5% in the ongoing fiscal year, meaning that the country was to miss the government-set target of 5.4%.

The Washington-based lender, in that report, added that the country’s economy could see a growth of 5.4% in FY18 on the back of continued mushroom growth in the services sector, recovery of agriculture and uptick in infrastructure investment.

“The services sector, which comprises more than half of the economy, is expected to be the primary source of growth,” stated report.

Additionally World Bank Country Director for Pakistan, Patchamuthu Illangovan, has stressed on the need for increased investment in social sectors like health, education and nutrition. “All this would lead to a vibrant and dynamic society as well as the economy,” he has stated.

Riaz Haq said...

The Fictions We Live By. By @ejazhaider #missingperson #Pakistan

No group has claimed responsibility for abducting them. Reports suggest that in the case of Haider his cellphone was not switched off after his abduction and his wife got a message asking her to recover their car from area and point X, not exactly the modus operandi of groups that kidnap people. There’s no news that law enforcement agencies have been able to track them through their cellphones, a fairly easy and standard exercise with today’s technology even if the cell is switched off. This is why criminal gangs kidnapping a person immediately get rid of his/her cellphone because that’s an easily trackable device.

Two of those gone missing were picked up from their homes. At least one report suggests that their Facebook and WhatsApp accounts had remained active post-disappearance, though this writer could not independently verify that.

Be that as it may, prima facie this points to the fact that whoever has taken them is not particularly bothered about law enforcement tracking the disappeared. No terrorist or criminal group can afford to do that or be so brazen. The implication: they are in the custody of some state agency.

The strand common to all of them, I am told by those who followed their activism, is their critical approach to state policies, extremism and in some cases the military’s policies.

Is there something more than this? There are many among us who are critical of state policies, rage against extremism, criticize the military, not just through our writings but also from the bully pulpits of television. What extra bit might these people have done to be thus picked up?

I don’t know. What I do know, however, is somewhat simple: a state that breaks its legal-constitutional compact with its citizen(s), regardless of its military strength, hardware and fancy platforms, is internally weak. Every state has multiple ethnic, linguistic groups whose interests often diverge. Other interest groups use pressure, lobbying, the media and, now, different digital platforms to agitate a number of issues—from taxes and tariffs to reforms to policies. The ambit of such dissent is, and can be, very wide. All of this is normal business. Politics tries to aggregate these interests. That is where political parties and legislation come in. The courts play an important role as arbiters, developing jurisprudence on points of law and interpreting the constitution. None of this is linear; most of it is noisy; some of it can be downright messy.

Riaz Haq said...

#India dismayed at #UK support to #China-#Pakistan Economic Corridor. #CPEC …

India will convey its disappointment with the United Kingdom’s support to the proposed China-Pakistan Economic Corridor (CPEC).

India will voice its concerns about the British government's move to encourage UK companies to invest in projects along the CPEC.

Corridor areas

New Delhi is opposed to the CPEC as it is set to pass through areas, which India accused Pakistan of illegally occupying in Kashmir, sources told DH.

The UK formally expressed interest in the CPEC during the recent visit to Pakistan of Alok Sharma, Parliamentary Under Secretary of State to the Foreign and Commonwealth Office (Minister for Asia and the Pacific) of British government.

Riaz Haq said...

Top marks in 1st term see #NawazSharif eyeing 2018 re-election in #Pakistan- #economy #security Nikkei Asian Review

In August, the country completed the International Monetary Fund's Extended Fund Facility program, which provided $6.4 billion in financial aid over three years on condition the country undertakes certain reforms, including fiscal austerity and privatization measures. Macroeconomic indexes are up across the board, and relations with the U.S. and the wider international community have improved.

Public order, which has long plagued the entire country, is normalizing thanks to the military's anti-terrorism campaign.

Although it can only be described as reaching the halfway point in its efforts to promote exports and manufacturing, reform the tax code and privatize state-run companies, Pakistan's recovery is undoubtedly gathering pace.

Gross domestic product growth fell short of the country's 5% target for fiscal 2016 -- which ended in June -- due mainly to a poor harvest of the primary agricultural product, cotton. But for fiscal 2017, the country is confidently projecting growth above 5%. The consumer price index, which for a time saw double-digit annual growth, fell to 2.9% on average in fiscal 2016. The government's annual deficit has fallen from 8.2% in fiscal 2013 to 4.6% of GDP.

Under Sharif, the ruling Pakistan Muslim League (Nawaz) party, or PML-N has focused on building infrastructure and public transportation systems. It has also made certain progress, mainly in its stronghold of Punjab, developing agricultural areas and addressing unemployment.

The centerpiece of its political campaign is the China Pakistan Economic Corridor project, a comprehensive infrastructure program relying on financial help from China. Investment in CPEC projects totals $51 billion, mainly for the building of power plants, but also encompassing roads, ports, railroads and airports, and offers hope of spurring industry nationwide.

"There's a significant improvement both on the economic and security sides. Democracy is also taking root," said Arif Habib, CEO of leading conglomerate Arif Habib group, when asked about the performance of the Sharif administration. "The media is free, and the judiciary system is also improving."

Abdul Aleem, secretary-general of the Overseas Investors Chamber of Commerce and Industry, comprising 195 foreign companies and other organizations, said "The government is very strong," although "commodity prices, especially oil, are the biggest risk." As for the sustainability of the anti-terrorism strategy, he said, "I don't think the Army's policy will change. And the relationship with the civilian government will be better."

"The current government is spending a lot of money on infrastructure and energy, which is deeply requisite for business growth and development," commented Shahrukh Hasan, group managing director of leading media company Jang group, which owns news channel Geo TV and the English-language paper The News.

Foreign policy decisions in Pakistan are often intertwined with the priorities of the military, especially with regard to the U.S. and India. Asked about new Army Chief Gen. Qamar Javed Bajwa, Hasan sees positive signals in his attitude toward relations with India.

Another positive for Hasan is the appointment of a former Karachi Corps Commander, "a good person with an open mind and liberal views," as director general of the military's powerful Inter-Services Intelligence agency.

Riaz Haq said...

#CPEC to transform #Pakistan's landscape. #China

China steps up investment in new trade route
Pakistan is one of the first countries along One Belt, One Road that is receiving massive investments from China. Through its initiatives, the world’s second largest economy aims to showcase how bilateral cooperation can lead to economic transformation
By Daniel Yu

14 Dec 2016

As the world was fixating over the high-pitch battle for the election of the next US president in the first week of November, a convoy of container trucks from Kashgar, China’s westernmost city in the Xinjiang Uygur Autonomous Region was making their way through the 1,300-kilometre Karakoram Highway. By the 12th of November, it had arrived at Gwadar Port on the Arabian Sea in the first-ever trial run of an overland route for Chinese goods destined for the Middle East and Europe.

For China, it marks an important milestone in its efforts to find an alternate route for its exports and especially in helping to develop its westernmost region, which has lagged behind the rapid growth seen in its eastern frontier. It is the first steps as China pursues its bold ambition to revive the historic Silk Road as part of its One Belt, One Road (OBOR) initiative.

For Pakistan, it is proof that since the China Pakistan Corridor (CPEC) was first announced, the country may be on the cusp of a change that could reverse the decades of under-development that has been one of the factors propagating the history of sectarian violence in the region.

That the Chinese initiatives are fraught with risks for its infrastructure projects in Pakistan and elsewhere along the OBOR initiative including in Central Asia is without question. But Dominique de Villepin, the former French prime minister recently told The Asset that it was important to start as it creates incentives for other countries. “Projects in Pakistan have started quite well and building infrastructure means more relationships between countries.”

Shaukat Aziz, the former prime minister of Pakistan, describes the country’s partnership with China and which forms part of the OBOR initiative of Chinese President Xi Jinping as a game changer. China has committed US$46 billion worth of projects – about 17% of the country’s nominal GDP – which Aziz has described as unprecedented in the country’s history.

That commitment, in the guise of CPEC, was signed formally 20 months ago in April 2015 during the state visit of Xi to Pakistan. Already, more than US$14 billion of the funds promised have been invested. “Funds continue to come in every week, every month,” shares one informed source. “They are going to fund power plants, roads, ports and other infrastructure. Some are coming in as debt; others as equity.” By 2018, Pakistan will be able to enjoy a surplus in power for the first time.

China has had a cordial relationship with Pakistan historically. But until recently, it has never translated to actual economic activity. Part of the problem is the security situation in the country. One of China’s objectives is to build an extensive road and rail network from China’s western Xinjiang province through Pakistan’s heartland and into the Port of Gwadar, a deep-water port with a draft of 47 feet located on the southwestern coast of Balochistan by the critical Straits of Hormuz in the Arabian Sea.

When the Pakistan army finally managed to take control of the security situation three years ago, the domestic economy started to turn a corner. With a population of 220 million people that needs to eat, live, etc, the pick-up started to accelerate, one analyst notes.

Riaz Haq said...

#CPEC to transform #Pakistan's landscape. #China

Then discussion with China resumed, which involves restarting work and expanding the port and the ancillary links. With the signing of the CPEC agreement, it essentially turbo-charged the engines, explains one banker. “If China was not there, you would still have seen some growth [as a result of the improved security situation] but the Chinese investments really transformed it.” Pakistan’s problem is the lack of long-term capital, which was critical to support its power sector. China supplied the much-needed, long-term strategic financing.

Pakistan is one of the first countries along OBOR that China is doing a variety of investments. “From China’s perspective, it wants to show Pakistan as a model case of how as a result of its initiatives, it was able to transform the place,” adds one observer. “Previously the relationship was based primarily on trade with Pakistan importing from China. With CPEC, it has become an economic partnership.”

China’s stepped-up investment in Pakistan has had other spillover effects. For example, the Pakistan Stock Exchange is one of the region’s best-performing up 17.1% to mid-October 2016 according to the MSCI Share Price Index behind Indonesia (23.1%) and ahead of the Philippines (1.7%) and Malaysia (1.5%). Portfolio investors from Europe and the US are notable especially as Pakistan secured an MSCI upgrade to emerging from frontier market status in June 2016.

Strategic investors are also showing interest to enter the country with a population of 195 million. In July 2016, the Dutch cooperative, FrieslandCampina (best known for the Dutch Lady brand of dairy products), teamed up with the International Finance Corp and FMO, the Netherlands development bank, to acquire a 51% interest in Engro Foods for US$448 million from Engro Corp, one of Pakistan’s largest conglomerates. It is one of the largest private sector foreign direct investment in Pakistan in recent years.

Chinese investors have started to make their move into Pakistan. Shanghai Electric has completed its deal to buy a controlling 66.4% stake in Pakistan power generation and distribution company K-Electric for US$1.77 billion.

Dubai based Abraaj Group said it had signed a definitive agreement, after the transaction was originally announced at the end of August. It is the biggest M&A deal in Pakistan in the past decade. K-Electric serves 2.2 million customers in and around Karachi.

Shanghai Electric Power, which is a subsidiary of State Power Investment Corporation of China, says that the deal makes the beginning of a long term cooperation arrangement with Abraaj. SEP is listed on the Shanghai Stock Exchange.

K-Electric used to be known as Karachi Electric Supply Co, and is the only vertically integrated power utility in Pakistan. Abraaj made its investment in 2009. Since then K- Electric has added 1,000 megawatts (MW) of generating capacity, as well as improving the efficiency of its transmission and distribution network.

K-Electric produces electricity from its own generation units, with an installed capacity of 2,341MW. It also has power purchase agreements for 1,021MW from various Independent Power Producers (IPPs) and from the Karachi Nuclear Power Plant.

Elsewhere, PowerChina Resources is currently building two 330MW units located in the THAR coal mining area. PowerChina is also building two 660MW units at the Port Qasim coal fired power plant, around 40-kilometre from Karachi. The first unit is expected to come into service by the end of 2017. This will be the biggest coal fired plant in Pakistan, with a project cost of US$2 billion.

Riaz Haq said...

India 60th in inclusive development index; ranks below China, Pakistan

India has been ranked 60th among 79 developing economies, below neighbouring China and Pakistan, in the inclusive development index, according to a WEF report. WEF’s ‘Inclusive Growth and Development Report 2017’, released today, said that most countries are missing important opportunities to raise economic growth and reduce inequality at the same time because the growth model and measurement tools that have guided policymakers for decades require significant readjustment.

Lithuania tops the list of 79 developing economies that also features Azerbaijan and Hungary at second and third positions, respectively. While India is placed at the 60th spot, many of the neighbouring nations are ahead in the rankings. China is ranked at the 15th position, Nepal (27th), Bangladesh (36th) and Pakistan (52nd).

The Inclusive Development Index (IDI) is based on 12 performance indicators. In order to provide a more complete measure of economic development than GDP growth alone, the index has three pillars — Growth and Development, Inclusion and Intergenerational Equity, and Sustainability.

Riaz Haq said...

78% of #US companies in #Pakistan plan to increase #investment in 2017: survey. #FDI … via @epakistantoday

A perception survey conducted by the American Business Council showed that there was an improvement of over 30% in the law and order situation from 2015-16.

Over 78% of respondents have indicated that they plan to invest in Pakistan over the next 12 months as compared to 65% in 2015 and 83% are optimistic about the long term economic climate.

The members have however separately commented about the government’s tendency to introduce mini budgets as well as sudden changes in policies or rules during the course of a fiscal year. “Such steps negatively impact new as well as existing investments,” the members stated.

The perception survey allowed ABC members to rate their satisfaction on various economic, regulatory and political factors that affect the performance and growth of businesses operating in Pakistan over 2015-16.

The business climate was rated on each of the various factors influencing it, including implementation and consistency of trade and competition policies, government development budget, domestic market, internal and external political climate, and law and order.

For 2015-16, the vast majority of respondents rated the business climate of Pakistan as satisfactory with only 8% giving it a poor rating. This is a marked improvement over 2014-15 when 11% of participants rated the business climate as poor. The overall positive perception of American investors reveals an expectation of some economic stability and an improvement in Pakistan’s economic environment.

The participants were also asked to rate the performance of various ministries directly affecting the business climate. In this regard, the overall trend reflects a slight improvement in the performance of various ministries from last year.

The Ministry of Petroleum and Natural Resource showed a marked improvement with 78% of participants reporting the performance as fair and 16% reporting it as poor. In 2014-15, 46% rated the performance of this ministry as fair and 51% rated it poorly.

American Business Council of Pakistan President Sami Ahmed said, “Our members are positive and remain committed to Pakistan.” Ahmed added that international standing and perception is extremely important as Pakistan competes with other Asian players to attract foreign capital in the form of trade exports, human resources, and most importantly, direct foreign investment.

The ABC is one of the largest investor groups in Pakistan with 67 members, most of whom represent Fortune 500 companies. They operate in various sectors including healthcare, financial services, information technology, chemicals & fertilizers, energy, FMCG, food & beverage, oil, and others.

ABC members have cumulative revenues of US $4.0 billion. Their contribution to the National Exchequer, through direct/indirect taxes is approximately Rs 102 billion. They exported goods worth Rs 6.60 billion during 2015, and directly employ over 34,000 people, with 140,000 dependents, and indirectly employ approximately 1 million people through their networks of agents, distributors, contractors, etc.

The ABC is affiliated with the Federation of Pakistan Chambers of Commerce & Industry (FPCCI) and is a member of the US Chamber of Commerce (USCC), Washington D C and the Asia-Pacific Council of American Chambers of Commerce (APCAC). ABC also has a close working relationship with the US-Pakistan Business Council, Washington, which is a component of the USCC.

Riaz Haq said...

17 predictions for Pakistan’s economy in 2017

by Wali Zahid

As Pakistan continues its march from being a frontier economy to becoming an emerging market, 2017 may be the best year in the country’s 70-year-long history. From increase in foreign investment, creation of Export-Import Bank to likely changes in the auto industry, here’s what we predict will happen to Pakistan’s economy this year.

GDP growth: Although gross domestic product (GDP) growth forecasts by International Monetary Fund, World Bank and federal budget vary, Pakistan’s GDP is likely to grow by 4.7 per cent this year. The annual GDP may increase from $270 billion to around $300 billion and for the first time, the Purchasing Power Parity may cross the $1trillion mark. Pakistan is currently 40th largest economy in the world and our ranking may improve by a point or two.
WEF report: Pakistan leaves India behind in IDI

Debt: National debt, currently at $73 billion, will continue to grow.

Debt-to-GDP ratio: Currently at 64.8 per cent, it may decline slightly.

Foreign exchange: Reserves will continue to be in the region of $23-24 billion.

Stock market: Pakistan will enter MSCI’s Emerging Markets category in May, meaning larger amounts will inflow. MSCI is a leading provider of international investment decision support tools. In 2016, Pakistan Stock Exchange (PSX) provided 46 per cent returns. KSE-100 benchmark index is also likely to cross 55,000 points from current nearly 48,000 points. Forty per cent stakes in PSX will go to Chinese consortium and this is likely to bring large institutional investors from other countries.

Retail: More large shopping malls will be built or become operational across major urban centres. Superstore chains will open new stores in unprecedented three-digit numbers.

Over 78% American companies say willing to invest more in Pakistan

Tax filers: Number of active tax payers/filers may reach 1.2 million.

Exports: Although IT exports are picking up, Pakistani exports will continue its declining trend, mostly because of poor cotton production, our low global competitiveness and travel advisories.

Export-Import Bank: The bank may be functional before June to facilitate exporters and importers after State Bank of Pakistan licenses it.

Foreign Direct Investment: FDI this year may cross the $1-billion mark.

Remittances: After a drop in 2016, remittances may pick up to reach $20billion mark.

Inflation: It may remain between four and five per cent as low oil prices are expected to stay stable.

Agriculture: Agriculture sector will continue to remain affected because of declining cotton production.

Chinese firms willing to invest in Pakistan

Finance: The sector will increase focus on financial inclusion, generating opportunities for micro-finance and commercial banks.

Banking: Smart banking, mobile banking and branchless banking will increase.

Ease of doing business index: Pakistan, at 144 out of 190 countries, was among top 10 global improvers in World Bank’s 2017 Doing Business rankings. In the 2018 ranking, it will improve further.

Auto industry: Pakistan may need additional 100,000 trucks to meet the CPEC-related material and freight transport needs and it is unlikely that this demand is planned and met in time. Demand for locally manufactured new and imported used cars will continue to rise. Although there’s interest from Volkswagen, Kia, Renault and Nissan for manufacturing plants in Pakistan, the production will not start this year which also means prices of cars will not come down as current producers – Toyota, Honda and Suzuki – remain in monopolistic situation.

Riaz Haq said...

#Pakistan’s obsession with #infrastructure at the expense of #education, #healthcare. #CPEC #China via @TheEconomist

Lijian Zhao, a Chinese diplomat, says China is all too aware that Pakistan needs more than just big-ticket infrastructure if it is to flourish. Disarmingly, he praises the efforts of Britain and other countries to improve Pakistan’s “software”, such as education and the rule of law. “But China’s expertise is hardware,” says Mr Zhao.

Riaz Haq said...

#Pakistan #banks show strong growth. #Deposits up 20%, #loans rise 17% in 2016.

Banks advanced Rs5.6 trillion to the private sector in 2016, which is 17 per cent more than 2015
Deposits at Pakistan's commercial banks reached Rs11.2 trillion as of December 30, 2016. At this level, it works out as a 20.4 per cent year-on-year growth in deposits compared to the last three years.

Add to it the good news that banks advanced Rs5.6 trillion to the private sector in 2016, which is 17 per cent more than 2015 when only Rs4.8 trillion was sanctioned.

Banking and equity sector analyst Umair Naseer of Topline Securities said this is significantly higher than the historical average growth of 12 per cent in the past three years. He added that the strong deposit growth bodes well for banks as it remains the key earning driver in a low interest rate environment.

This is a success story for the banking sector as it took place at a time when some sectors of the economy, including the biggest one such as textiles - are still struggling to match their good performance in the past. At the same time, exports, hit by the international crash of oil and commodity prices and lower domestic output, declined from $24 billion to $19 billion in 2016.

The easy money policy of the State Bank of Pakistan (SBP), the central bank, has brought down the interest rate to 5.75 per cent - the lowest in 42 years. The banks have also been slashing the profit rate payable to depositors. This, in turn, was holding up a major growth in deposits.

The government of Pakistan, financial institutions and economists firmly believe that commercial banks should redouble their efforts and undertake a major deposit mobilisation campaign so that they can lend more money to the credit-starved private sector, including key industries such as textiles and the stagnant export sector. The government has to share part of the blame for credit shortage in the private sector as it has been borrowing heavily to fill its budgetary gap.

The current year will need redoubling of the deposit mobilisation efforts for growth as there are already some economists who feel the rate may be reduced to the range of 13 to 15 per cent. This is because, in the recent past, the government deposited larger amounts of money in these banks to earn larger profits. But this practice is almost over.

The SBP recently reported that bank investments rose eight per cent to Rs7.2 trillion last year. This helped the economy to look up after years of slowdown. It also confirms the fact that the economy is looking up under pro-business Prime Minister Nawaz Sharif, whose party will face new parliamentary elections in the first half of 2018. Other key elements which can help him win these elections will be the fast-track implementation of the $61 billion Chinese investment in the China Pakistan Economic Corridor (CPEC).

Other positive factors are the recently announced FDI inflow from the UAE, Saudi Arabia and other countries, attracted by CPEC and the improved investment climate in Pakistan, and revival of the overall economy.

The Chinese investment in financial and equity sectors and energy is now very substantial. A consortium of three Chinese and two Pakistani companies have bought 40 per cent shares of the PSX - the Karachi Stock Exchange, for $80 million. Besides attracting more Chinese FDI, it is likely to encourage other foreign countries and companies to invest in Pakistani shares and the financial market.

Riaz Haq said...

Inter-sectoral imbalances

The growth rate and the share of the three sectors — agriculture, industry and service — varies from year to year but their contribution to GDP, by and large, remains within a narrow range: close to 55pc for services, less than 25pc for agriculture and just over 20pc for industry.

But over the three successive years, industrial growth has equaled or outstripped expansion in the services sector as well as the GDP growth rate in 2016. To quote the State Bank of Pakistan’s data, industry grew at the same pace as services (4.5pc) in FY14 but exceeded the latter’s rate in FY15 (4.8pc against 4.3pc) and with a much wider margin (6.8pc against 5.7pc) in fiscal year 2016. The industrial expansion at 6.7pc surpassed the real GDP growth rate of 4.7pc last year.

In the first quarter of this fiscal year large scale manufacturing remained subdued with a growth rate of 2.2pc down from 3.9pc in the same period of last year but rebounded in November 2016 with an annualised growth rate of 8pc.

The latest trend is likely to continue because of fiscal stimulus provided in the current year’s federal budget, the recent surge in imports of machinery for balancing and modernisation of existing manufacturing facilities, and improvements in the security situation and energy supply.

The manufacturing sector has also received an impetus from an Rs180bn export package announced earlier this month by Prime Minister Nawaz Sharif.

On the other hand, agricultural growth — which remained stable at 2.5pc in FY2014 and FY2015 — dropped to minus 0.2pc in FY2016, mainly because of the failure of cotton crop in Punjab.

The various incentives and subsidies by the federal and provincial governments are reversing the negative growth trend in agriculture this fiscal year. Under pressure by farmers, the official announcement for discontinuation of cash subsidy to growers last week was annulled within 72 hours.

Official policies are now helping commodity producers gain some lost ground, but producers need to stand on their feet to make bigger strides towards achieving a more balanced inter-sectoral growth and improving economic fundamentals.

Riaz Haq said...

US State Dept: "#US exports to Pakistan sustain 9,200 well-paying #American jobs" Example: 55 GE locomotives in 2016

The data shows that the United States exported $1.8 billion in goods to Pakistan in 2015, creating or supporting over 9,200 US jobs. As one example, General Electric won a contract this year to provide 55 locomotives to Pakistan Railways, all of which will be manufactured at Erie in Pennsylvania.

The data reveals that foreign direct investment from Pakistan to the United States in 2015 supported up to 1,000 additional US jobs.

Riaz Haq said...

Forget #India, Its Neighbors #Pakistan, #Bangladesh & #SriLanka Are the Next Big Thing. #Economy … via @barronsonline

Forget India. Investors looking for the next big thing should look to its South Asia neighbors instead – Pakistan, Bangladesh and Sri Lanka.

With a combined 390 million people, the three countries represent what Morgan Stanley chief global strategist Ruchir Sharma calls “the quiet rise of South Asia” as opposed to India which has been “flattered by spasms of hype for years”. While overshadowed by their larger neighbor, the trio is enjoying fast-paced growth, embracing much needed reforms, and look set to enjoy a demographic dividend over the long term. “A substantially higher economic growth rate than in many other economies globally, coupled with fantastic demographics that will continue supporting growth for many years ahead”, East Capital fund manager Adrian Pop tells Barron’s Asia. The Stockholm-based firm manages nearly EUR3 billion in frontier markets.

Pakistan is the flag bearer of the positive changes taking place in the South Asian nations. Since coming to power five years ago, Prime Minister Nawaz Sharif has got inflation under control, cut the budget deficit and reined in the current account deficit. But more importantly, terrorism finally appears to be on the back-foot given more assertive action by the army. Chinese investment has also poured in: $50 billion will be spent on new roads, transport links and energy projects. “More power capacity is key for Pakistan to move to an even higher economic growth rate,” says Pop. That will benefit stocks in materials and energy. In December, the Pakistan Stock Exchange sold 40% of itself to consortium of Chinese investors.

The Karachi stock index is up by about 50% since the start of last year, propelled by index compiler MSCI’s decision to bump up the country to emerging markets status. That will bring in hundreds of millions of dollars from passive funds into the Pakistani benchmark. The rally in stocks has arguably left the market looking a little pricey as the KSE 100 index trades at over 12 times earnings, its heftiest valuation since late 2009. That’s still about a 15% discount to the MSCI emerging markets index, however, plus Pakistani stocks yield an attractive 4%-plus dividend.

Riaz Haq said...

#Pakistan equities bouyant ahead of index reclassification- Nikkei Asian Review. #PSX #Karachi #MSCI #EmergingMarket

Analysts say banking, construction stocks to benefit from inward investment

The Stock Exchange of Pakistan emerged as Asia's best performing equity market and the fifth best in the world in 2016 by providing a total return of 45.7%. The market then peaked at 50,192.4 points on Jan. 26, falling back slightly in February and March, but analysts see more upside ahead of Pakistan's graduation to the MSCI Emerging Markets Index.

The stellar performance of the benchmark KSE 100 Index in the last year has been largely attributed to index compiler MSCI's decision last June to move the country to its EM Index from its Frontier Markets Index. The index stood at 36,979.96 at the time of MSCI's announcement.

By April 4, the index of 100 blue chips was at 48,088.37. With the shift to the EM Index expected to happen in May, the KSE 100 is expected to extend its gains.

Pakistan will be represented in the EM Index by two large capitalization stocks and five mid-caps, with a weighting of 0.16%. In addition, 19 small cap companies will become part of the EM Small Cap Index.

MSCI had earlier listed nine Pakistani companies for possible inclusion in the EM Index, including Hub Power and Pakistan State Oil, but those two are now slated to join the small cap index following a review in November. Shahbaz Ashraf, head of research at Karachi brokerage Arif Habib, said the stocks may have been downgraded because of low trading volumes.

As of November, Pakistan's weighting in the Frontier Markets Index stood at 9.63%, with 16 constituents: Engro, Fatima Fertilizer, Fauji Fertilizer, Habib Bank, Hub Power, Indus Motor, K-Electric, Lucky Cement, MCB Bank, National Bank, Oil and Gas Development, Pakistan Oilfields, Pakistan Petroleum, Pakistan State Oil, Pakistan Telecommunication and United Bank.

Pakistan has been drawing growing interest from foreign investors. According to the government, inward foreign investment between July 2016 and February 2017 totaled $1.284 billion, surpassing the total of $1.281 billion in the fiscal year to June 2016. By sector, the largest portion of investment went into power, followed by construction, then oil and gas. The Pakistan Board of Investment estimates that foreign investment this fiscal year could reach $3 billion to $5 billion.

"Strong liquidity and increased investor confidence has led to increased domestic market penetration," said Mohammad Bin Shahid, portfolio manager at UBL Fund Managers, referring to foreign investment in stocks.

Riaz Haq said...

Thomas Hobbes’s mythic Leviathan was a metaphor for the role of the state
in an anarchic context—the great power to overawe all others and create the
peace necessary for the development of an ordered civil society. Without effective
government, Hobbes suggests, we could not sleep at night

Royal Netherlands Army

This paper draws upon the European experiences with terrorism in order to draw
lessons for today’s strategic environment. The central thesis is that the current
approach to terrorism is flawed. The West has developed a myopic view and has lost
sight of wider strategic interests. Terrorism has replaced the wider security framework
wholesale and plays an overly dominant role in policy formulation. The continued pursuit
of terrorists by primarily military means will lead to a Hobbesian state of nature which is
not in the interest of the Western World. A return to a broader view of the strategic
environment, with a more constrained use of state violence, is recommended.

Starting with the run up to the present situation in the War on Terror, the paper
describes some of the experiences with the German Red Army Faction (RAF) in the
1970s. It draws lessons from this episode and applies them to the War on Terror. The
central thesis is that the current approach to terrorism is flawed. The West has
developed a myopic view on terrorism and has lost sight of wider strategic interests.
The sole issue of terrorism has replaced the wider security framework wholesale and
therefore plays too dominant a role in policy making. Furthermore, the War on Terror
instigated the invasion of Iraq which has discredited the West in a major way. Although
justifiably started as a military operation, the continued pursuit of terrorism by primarily
military means will lead to a Hobbesian state of nature, which is not in the interest of the
Western world.


Granting a leading role to the military element of power in
the struggles against an age old phenomenon will lead to a perpetual state of war,
thereby realizing a Hobbesian state of nature, but – in absence of an authoritarian world
government – without a Leviathan “to keep them all in awe.”36 John Locke, in contrast,
attributed man with “calm reason and conscience,” which would constrain the use of
violence.37 This philosophy seems better befitting Western leaders in the return to a
policy where the use of force is truly a last resort