Pakistan targets potential economic diversification
THE THREE-TIME Prime Minister of Pakistan, Mian Nawaz Sharif with proven business and governance credentials has led the country wisely and provided the much needed political will to tap the economic potential of the country. Democratic, State Institutions Judiciary and Media have all contributed to the political and economic stability. Nearly 4 years completed in the current term of office there has not been a single case involving financial corruption by any cabinet member, while the $46b investment from China in the Pakistan-China economic corridor has provided a new energy to Pakistan’s market activity.
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 are some targets Pakistan’s economy is aiming for :
GDP growth: Pakistan is currently 40th largest economy in the world and our ranking may improve by a point or two. 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 in 2017. The annual GDP may increase from $270 billion to around $300 billion and for the first time, the Purchasing Power Parity may cross the $1 trillion mark.
Stock market: Pakistan Stock Market continues to perform solidly. It is the fifth highest profit yielding on the planet and first in Asia. 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 49,000 points. Forty per cent stakes in PSX have been bought by Chinese consortium and this is likely to bring large institutional investors from other countries. The value of the transaction is $85 million.
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.
Foreign Direct Investment: FDI this year may cross the $1 billion mark. Notable recent investments include Yamaha, Japan ($150m), Turkish investment in Dawlence ($258m), Dutch Consortium in Engro Foods ($448m), Shangai Electric ($1.6b) and Al Khalifa (UAE) and Parco Refinery ($5b).
Agriculture: Pakistan ranks fourth in cotton production, while it enjoys eighth and 11th position worldwide in wheat and rice respectively.
Auto industry: There is interest from Volkswagen, Kia, Renault and Nissan for manufacturing plants in Pakistan, under the newly launched policy to encourage new comers in automanufacturing sector. Pakistan has undergone a series of positive developments that merit recognition, states a recently published report. “These developments set the table for the sort of policies and investments needed to move the country on a path travelled by Indonesia or Brazil,” Americanbased magazine said, adding Islamabad had its first peaceful democratic transition in 2013 and the military, the civilian government, and civil society are broadly aligned on security issues. Further, the report pointed out that the country’s economy has been growing for a number of years and it is back on track to complete an International Monetary Fund (IMF) programme from start to finish for the first time in its history. “Pakistan’s growing middle class, which will expand from an estimated 40 million people today to 100 million people by 2050, represents a powerful engine for change, demanding both improved services and greater access to opportunities.”
Infrastructure: The Gwadar Port and Islamabad Airport are vital infrastructural projects and remain a focus of domestic and international interests. The landmark metro bus service connecting the capital city of Islamabad to neighbouring cities has already won international commentator’s praise. Out of $46 billion Chinese investment for CPEC, $10 billion is earmarked for infrastructure. Approval for construction of Diamer – Basha Dam has provided further strength to the sector.