Pakistan "is more readily thought of as a pit of instability than as a source of opportunity," as The Economist puts it. Yet after years of upheaval, it is making impressive progress, and appears to offer plenty of potential, says Dimitra DeFotis in Barron's. One encouraging development has been a marked decline in political violence, despite sporadic headline-grabbing horrors.
The number of civilian fatalities in terrorist incidents declined from over 3,000 to under 1,000 in 2015, notes Bader Al Hussain on SeekingAlpha.com. In 2013, Pakistan for the first time was handed from one civilian government to another after years of military rule.
The macroeconomic backdrop has also brightened considerably. The government has stuck to the terms of a $6.6bn loan package from the International Monetary Fund that began in 2013. The revenue collection system has been improved and subsidies cut, helping reduce a budget deficit that peaked at 8% of GDP. The annual overspend is now under 2%. The state hasalso begun to restructure or sell off struggling public companies.
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The fall in the oil price has been a boon because it uses imported fuel for around 40% of its power supply. That has helped tame inflation and underpin growth, which has ticked up to 5% after averaging 3.4% in the past five years. And the long-term outlook is encouraging. Chinese investment in Pakistan's infrastructure, worth $46bn over the next decade, could be a "game-changer", says Al Hussain. Power plants are being prioritised.
The business culture is solid: Pakistan is actually ahead of India in the World Bank's ease-of-doing-business rankings. A population of 195 million, the world's sixth-biggest, implies plenty of scope for consumption to rise strongly in future. Coca-Cola's Pakistan operations notched up double-digit growth in the first quarter. The stockmarket, meanwhile, could soon be promoted from "frontier" to "emerging market" status by index provider MSCI, thus drumming up more interest. One to keep an eye on.
Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.
After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.
His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.
Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.
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