Over the past two years, the country has seen a \u201cmacroeconomic miracle\u201d. While inflation was down from 40 per cent annually to near zero, Eurobonds maturing in 2031 rose from 40 cents on the dollar to 80 cents. The KSE-100 index has also tripled.<\/p>\n
The government reached a \u201cstabilisation agreement\u201d with the International Monetary Fund last September with the lender approving a $7 billion Extended Fund Facility (EFF). Over $2bn has already been disbursed.<\/p>\n
\u201cPakistan is a good story,\u201d Genna Lozovsky, a chief investment officer at Sandglass Capital Management, was quoted by Barron\u2019s as saying. \u201cSo good it\u2019s not risky enough for us anymore.\u201d\u2019<\/p>\n
The media outlet further stated that the recent conflict with India \u201cwon\u2019t likely knock Pakistan\u2019s recovery off course\u201d but the \u201ccountry\u2019s own shaky underpinnings might\u201d.<\/p>\n
\u201cPakistan has been known for boom-and-bust cycles throughout its history,\u201d according to Khaled Sellami, an emerging markets sovereign debt manager at Barings. He said there are some signs that this time could be different.<\/p>\n
Pakistan\u2019s period of stabilisation started with a near-default experience in 2022-23 following Imran Khan\u2019s ouster. Alison Graham, chief investment officer at frontier markets specialist Voltan Capital Management stated, \u201cEveryone thought Pakistan would default along with Sri Lanka in 2023.\u201d<\/p>\n
Instead, the State Bank of Pakistan hiked interest rates from 10pc to 22pc, putting the country into recession but wringing out inflation.<\/p>\n
Last year, the country gained loans from sovereign creditors China, Saudi Arabia and the United Arab Emirates, while the GDP growth bounced back to 2.5pc. \u201cThe current account balance is positive, and they have a primary fiscal surplus [excluding interest payments],\u201d Sellami said. \u201cThat\u2019s something we haven\u2019t seen in many years.\u201d<\/p>\n
Pakistan remains in \u201crelative stagnation\u201d with cotton, apparel and cereals accounting for two-thirds of exports compared to India\u2019s development in advanced industries like IT and pharmaceuticals. Sellami said, \u201cIt is belatedly moving into IT outsourcing, foreign sales rising from near nothing to $3bn annually over the past few years,\u201d adding that India was in the $200bn range.<\/p>\n
Without a value-added ladder to climb, fate and free-spending election cycles may continue driving Pakistan\u2019s boom and bust, according to Graham. She continued, \u201cPakistan remains extremely fragile to external shocks.<\/p>\n
\u201cWhen there is a rally, you need to be in early.\u201d<\/p>\n
Sellami was more optimistic, being \u201cconstructive\u201d on Pakistani Eurobonds. He said that the country\u2019s foreign friends, China and the Gulf states, made it clear in 2022 that they were not writing blank cheques. \u201cThe government knows if they deviate from the tightrope they are walking, they won\u2019t have external finance,\u201d he added.<\/p>\n
On Monday, the Pakistan Stock Exchange (PSX) gained a record 9pc \u2014 the restored calm in the market mirroring that in the region after the recent Pakistan-India ceasefire that boosted investor mood. \u201cThe market has reacted jubilantly to the ceasefire announcement after Pakistan established effective deterrence against India,\u201d noted Yousuf M. Farooq, research director at Chase Securities.<\/p>\n","protected":false},"excerpt":{"rendered":"
Over the past two years, the country has seen a \u201cmacroeconomic miracle\u201d. While inflation was down from 40 per cent annually to near zero, Eurobonds maturing in 2031 rose from 40 cents on the dollar to 80 cents. The KSE-100 index has also tripled. The government reached a \u201cstabilisation agreement\u201d with the International Monetary Fund […]<\/p>\n","protected":false},"author":1,"featured_media":9121,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-9120","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-international-news"],"_links":{"self":[{"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=\/wp\/v2\/posts\/9120","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=9120"}],"version-history":[{"count":1,"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=\/wp\/v2\/posts\/9120\/revisions"}],"predecessor-version":[{"id":9122,"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=\/wp\/v2\/posts\/9120\/revisions\/9122"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=\/wp\/v2\/media\/9121"}],"wp:attachment":[{"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=9120"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=9120"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=9120"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}