Economy Of Pakistan
The resent financial crisis has impacted almost every country in the world. But in Pakistan case it was the past governments performance rather than the financial crisis which played a major role in the slow down of the economy. But the last couple of months have given the country economist a bit of breathing space.
Foreign exchange reserves have reached dose to ten billion dollars. It is the payment of first installment of loan by International Monetary Fund (IMF). Bold steps taken by government against some of the foreign exchange companies have resulted in the decline of rupees value against dollar.
Pakistan import bill both on account of merchandise and services has fallen. So one can hope that the current account deficit by June 2009 will be much lower than witnessed in 2007_08. Increase in remittances from overseas residents is another positive sign for the economy. One major factor behind this is the falling of rupees value against dollar. It also represents the confidence of the overseas residents in the Pakistan's economy.
Despite the failure of banking system all over the world, Pakistan's banks have remained stable. It is encouraging that Pakistan banks did not rely any kind on bail out package for their stability as against many of the European banks.
But the other side of the picture is quite grim. Inflation still remains a major threat to the living standard of people of the country. The government has still not passed the benefits of reduction in oil prices to consumer which is quite surprising. The prices of the general necessities are till vary high.
But one of the major worries for the government is the decline in industrial production. Manufacturing is in a severe grip of an energy crisis. The negative trend in industrial production is gaining momentum. This would have a major impact on country s export. So one cannot rule out the possibility of a further increase in current account deficit.
Foreign Direct Investment (FDI) has become static. One cannot argue with the fact that the prevailing law and order situation played a major role in the decline FDI. The stock market of the country has collapsed. It will take some time to regain the confidence of local and foreign investors in the stock market.
Foreign exchange reserves have reached dose to ten billion dollars. It is the payment of first installment of loan by International Monetary Fund (IMF). Bold steps taken by government against some of the foreign exchange companies have resulted in the decline of rupees value against dollar.
Pakistan import bill both on account of merchandise and services has fallen. So one can hope that the current account deficit by June 2009 will be much lower than witnessed in 2007_08. Increase in remittances from overseas residents is another positive sign for the economy. One major factor behind this is the falling of rupees value against dollar. It also represents the confidence of the overseas residents in the Pakistan's economy.
Despite the failure of banking system all over the world, Pakistan's banks have remained stable. It is encouraging that Pakistan banks did not rely any kind on bail out package for their stability as against many of the European banks.
But the other side of the picture is quite grim. Inflation still remains a major threat to the living standard of people of the country. The government has still not passed the benefits of reduction in oil prices to consumer which is quite surprising. The prices of the general necessities are till vary high.
But one of the major worries for the government is the decline in industrial production. Manufacturing is in a severe grip of an energy crisis. The negative trend in industrial production is gaining momentum. This would have a major impact on country s export. So one cannot rule out the possibility of a further increase in current account deficit.
Foreign Direct Investment (FDI) has become static. One cannot argue with the fact that the prevailing law and order situation played a major role in the decline FDI. The stock market of the country has collapsed. It will take some time to regain the confidence of local and foreign investors in the stock market.
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