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Pakistan Business Forecast Report Q4 2012

738.27

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Electronic License

Electronic License

An electronic version (mostly PDF, but can be Excel or PPT), which is either available for immediate download or will be sent via email by the Publisher of the report. The licencing for an electronic version is for use by the purchaser ONLY.

£738.27

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Market

All Sectors

Report Type

Country Guide

Country

Pakistan

Published

24 October 2012

Number of Pages

49

Report Delivery

Download

Delivery Lead Time

Immediate

Publisher

Business Monitor International

File Format

PDF

With elections due by early 2013, we see minimal scope for any major legislative initiatives following the recent election of Raja Pervaiz Ashraf as the countrys 17th prime minister. There remains an acute risk of another leadership scramble, as the government has yet to completely deal with the reopening of corruption cases against President Asif Ali Zardari.

Even though we expect Pakistans economic recovery to persist as domestic demand conditions continue to slowly improve, we believe that the economys prospects remain below par, and its outlook will be hampered by the governments fiscal mismanagement, the long-running energy crisis, and the countrys substantial exposure to the EU. Given our outlook for a gradual improvement of the countrys terms of trade over the next six to 12 months, with the price of oil projected to fall and the price of cotton forecast to rise, we expect an equally gradual narrowing of its trade and current account deficits.

The overall balance of payments picture remains clouded by a bleak export demand picture and still-lacklustre foreign investment inflows. The governments FY2012/13 (July-June) budget plans do not inspire much confidence. Any fiscal consolidation will very likely be minimal given the sitting governments lack of fiscal credibility, the lack of any major reforms on the expenditure and revenue side, and the fiscal indiscipline likely to result owing to the upcoming general elections.

Major Forecast Changes

In light of the recent (but temporary) acceleration of headline consumer price inflationary risks, coupled with strong signals from Pakistans currency and sovereign debt markets, we have abandoned our outlook for additional rate cuts, opting to stay neutral through to the end of our forecast period to 2021.

Key Risks To Outlook

Upside Risks To Inflation: Should external financing fail to materialise or should the government fail to mobilise its domestic resource base, it could result in further budgetary borrowings from the banking system, thus stoking inflation

Downside Risks To Growth: On a related note, should government borrowings from the banking system intensify, businesses struggle with tight credit conditions could worsen. Furthermore, a deeperthan- expected contraction of the EUs economy would hamper the countrys already-weak export growth prospects. Looking at the recent trends of industrial production, private sector credit and export growth, our scepticism regarding Pakistans economic momentum has only been reinforced.

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Select License Type

Electronic License

Electronic License

An electronic version (mostly PDF, but can be Excel or PPT), which is either available for immediate download or will be sent via email by the Publisher of the report. The licencing for an electronic version is for use by the purchaser ONLY.

£738.27

Change Currency

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USD

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