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Economy under pressure

Economy under pressure

At a time the world is expecting progressive view of Pakistan, the recent unfortunate events have marred the credibility and goodwill of the country’s economic affairs. The Morgan Stanley Capital International’s (MSCI) had recently reclassified Pakistan as the emerging markets after picking it up from the list of frontier markets. It was also expected that the flow of money will gain momentum in the country as the market would get attention from international investors after acquiring emerging market status. However, experts believe the stocks are under pressure in the wake of former prime minister Nawaz Sharif’s rally as the benchmark lost hundreds of points earlier in the day. According to a dispatch appearing in Wall Street Journal, the emerging markets are economically more developed than frontier markets and potential investors generally consider them as less risky. The sharp decline in the index ahead of the rally indicates the stocks would continue to remain under pressure in coming days due to political developments coupled with concerns over the accumulation of Rs800billion circular debt in the energy sector and uncertain oil prices in international market. According to MSCI, Pakistan will experience inflow of money into the stock exchange despite political chaos and economic pressure and that is the only positive understanding in the current situation.

The country is at the cross road where it can go either on the path of development or the road to nowhere. Unfortunately, the recent events on the political horizon have changed the perception of the economy in one blow. The national institutions and think thanks must do some research work to find out the causes behind the events which have sent Pakistan into troubles. A strong political system will ensure a strong economic base. The next elections are only a year away and plunging the country into the political and economic crisis is not a wise decision. The government of Pakistan Muslim League under Nawaz Sharif had failed to reap the benefits of the GSP plus status granted by the European Union or the huge investment made by China in the economic corridor. However, minus Nawaz formula is expected to cause more harm to the national economy than his presence in the office would have done. One can only hope that the new prime minister would try his best to avail the investment opportunities still offered by China and other countries.