Political conflicts hitting economy hard
Food scarcity can lead country into real instability
KSE saw biggest decline among 89 global benchmarks
Real instability knocking on doors of Pakistan
Multi dimensional political struggle between President, Pakistan People’s Party and PML-Nawaz as well as movement of lawyers has not only pushed the issues of food scarcity, loadshedding and inflation in the background but also brought the main stock index to its knees.
The efforts of State Bank of Pakistan that include May 23 step of raising its benchmark interest rate to tame inflation are not proving sufficient as inflation remains at a twenty-five year high.
Investors’ confidence is in a nosedive and capital flight has started with an alarming ratio while uncertainty and risk of default has resulted in biggest stock plunge in eight years recently.
Now the rumors about a big change on the political chessboard have added to the worries of investors and business community.
The unending political disputes have not only hurt the economy of Pakistan but also undermined the efforts to improve the living standards of people who according to world bodies are threatened due to food scarcity. “Half of Pakistanis can no longer afford sufficient food,” United Nations recently said.
If the situation remains unaddressed and top politicians remained busy in other issues, it could lead to real instability soon,” said Dr. Murtaza Mughal, President Pakistan Economy Watch.
People think that nobody is actually in command to address the real issues and take the country forward which is hurting Pakistan from all directions, said Mughal in a statement issued here today.
Key stock index has tumbled 23 percent this month, the biggest decline among 89 global benchmarks; the ruling coalition is urged to take action to restore confidence because investors and brokers have started protesting the moves of the Government.
During the last eight years economy blossomed with an average growth rate of 6.5 to 7.5 percent and foreign investment reached a record $8.4 billion in the year ended June 30.
But, many thinks that the growth achieved was not on solid economic foundations and dubs it as ‘casino economy.’
The political turmoil initiated last Nov. after an attempt to sideline former Chief Justice SC Iftikhar Chaudhry; the real growth will slow to 4-5 percent this fiscal year.
Standard and Poor’s and Moody’s Investors Service have already downgraded government bonds for the first time in nine years.
On the other hand, army has started some wise moves including pulling itself back from politics withdrawing officers from civilian government posts and ordering them to avoid involvement with politicians.
But, this institution should take some more steps to improve situation, the Pakistan Economy Watch statement said.
The ruling coalition is still divided over the issue of restoration of judges and proposed constitutional package which is adding to uncertainty and in this gloomy situation the investors are watching the moves of ruling coalition which is to determine the future of Pakistan.
