Pakistan in 2016: Economy, Security & Relations With India, US

How was the year 2016 for Pakistan? What can Pakistan expect in 2017?

Did Pakistan’s internal security improve in 2016? If do, how? And by how much? How was it done? By Zarb e Azb military operation? Did Pakistan implement the National Action Plan to address extremism and radicalization in society?

Source: South Asia Terrorism Portal

How did Pakistan’s economy do? And how did the stock market do? Did improved security help? Did China Pakistan Economic Corridor (CPEC) investments help boost investor confidence in the country?

Source: Bloomberg

What caused deterioration in India-Pakistan ties? Was it the murder of Burhan Wani and India’s attempt to blame it on “cross-border terrorism” from Pakistan? Did Indian PM Modi succeed in isolating Pakistan?

How will Obama’s exit and Trump’s presidency affect US-Pakistan relations? Will these be as bad as under Obama? Or better? Or worse under Trump? How will Pakistan’s close ties with China and warming relations with Russia play into this?

Viewpoint From Overseas host Faraz Darvesh discusses these questions with panelists Misbah Azam and Riaz Haq (

Related Links:

Haq's Musings

Pakistan KSE100 Stock Index Among World's Top Performers

Obama's Parting Shot: New Sanctions on Pakistan NESCOM

700,000 Indian Soldiers vs 10 Million Kashmiris

Is Modi Succeeding in Isolating Pakistan? 

China Pakistan Economic Corridor: 2 Million New Jobs

Impact of Trump Appointments on US Policy

Pakistan-China-Russia vs India-US-Japan


Riaz Haq said…
With 14% CAGR, #Pakistan #MSCI index beats #India's 8.39% CAGR in stock returns since Year 2000 via @economictimes
Pakistan's stock market has outperformed the Indian equity market with a huge gap since the beginning of the new century.

Over the past 16 years, the MSCI Pakistan index climbed over 14 per cent in dollar terms on a compounded annual growth (CAGR) basis, while the MSCI India index has advanced 8.39 per cent annually during the same period, data available with Bloomberg showed

The KSE100 index of the Karachi Stock Exchange rallied 2,625 per cent from 1,772 in January 2000 to around 48,300 in December 2016, while the Sensex of the BSE advanced 431 per cent in this period.

KSE100 tracks the performance of biggest companies by market capitalisation from each sector of the Pakistani economy listed on bourses.

On the hand, the 30-share Sensex jumped from 5,005 in December 1999 to 26,626 on December 30, 2016.

The macroeconomic conditions of India look strong in terms of gross domestic product (GDP). According to an earlier Economic Times report quoting the Central Intelligence Agency, India's real GDP growth rate was at 7.3 per cent in 2015, ranked 12th globally, compared with Pakistan's 4.2 per cent, ranked 60th.
Riaz Haq said…
For instance, auto sales in fiscal year 2016 have touched 217,679 units, an all-time high figure compared with previous best figures of 204,212 units in 2006-07 due to robust GDP growth rate and unprecedented auto financing from banks in Musharraf’s era.

The cement industry has gone in for capacity expansion from 44 million tons to 60 million tons within a couple of years to meet the massive rise in domestic demand due to China-Pakistan Economic Corridor (CPEC) and other public sector projects, said Chairman All Pakistan Cement Manufacturers Association (APCMA), Sayeed Tariq Saigol, here on Wednesday.

The APCMA Chairman said the rise in domestic demand has improved cement industry's capacity utilisation. However, he said suggestion by some quarters for the removal of import duty based on current trend would not be a wise decision.

Pakistan energy consumption rose 10.5% (India's 8.1%) in 2015
Riaz Haq said…
#India may matter less in the world during #Trump presidency. #Pakistan, #China #Russia #Asia

The diplomatic cover afforded by the Obama administration allowed the Modi government to focus its energies on isolating Pakistan internationally and get away with a heavy-handed policy in Kashmir – both policies that served to bolster the BJP domestically. Russia and China were relatively marginal to India’s diplomatic considerations, even though Delhi valued Moscow as a source of weapons and energy while the enhanced trade with China created a measure of interdependence that managed tensions. Delhi could choose not to participate in China’s ambitious One Belt One Road (OBOR) infrastructural initiative because the US, Western powers and Japan were envisaged as the primary sources of security, legitimacy and resources for India.

This entire calculus now stands upended. Trump is keen on dismantling the pillars of US foreign policy in a manner that makes the US’ political and bureaucratic machinery deeply uncomfortable. He wants to scale back American commitments abroad, he’d like to focus on an ‘America first’ policy and is expected to be explicitly transactional in his dealings with other countries. He has chosen a pro-Russian figure in Rex Tillerson as his Secretary of State and picked China hawk Peter Navarro to head the National Trade Council, leading many to anticipate serious tensions with China on trade issues.

Some in Delhi may believe that an aggressive US that counters an assertive China works for India. But policymakers will know that it is one thing to play geopolitical chess in peace time, i.e. strengthen regional partnerships to counter a rising power, and quite another being on the cusp of a US-China conflict in Asia and having to choose sides. It’s not clear if such developments will materialise soon, but the scene of global politics will move to great power dynamics between US, Russia and China. India will be peripheral to the concerns of all three for different reasons.

As far as the US is concerned, it is not clear how much attention Trump will devote to India while he is preoccupied with the inevitable domestic turbulence his presidency will generate and the resetting of ties with Russia and China. India’s leverage abroad now appears to depend on the Washington security establishment’s ability to normalise Trump and make him aware of Delhi’s utility to American strategy in Asia. But that establishment itself will take time recovering and coping with the changes he wants and India as a priority could slip in the process. Trump did not mention India in his foreign policy speech on April 27, 2016 and it is not clear if he has any definite ideas as to what to do with the relationship.
Riaz Haq said…
The “Crises of Room”—Robert Kaplan
January 2, 2017 | Filed under: Security and tagged with: Afghanistan, bombs falling on Gaza, Indian Ocean, social media, West Bank

While the Americans and Europeans focus on globalization, the appeal of nationalism and military power is growing in Eurasia. Missile and bomb tests, biological warfare programs, and the development of chemical weapons are “the products of a prosperous, liberalizing Asia,” Bracken notes. What the West has “failed to recognize” is that the technologies of war and wealth creation have always been closely connected: from Asia’s economic rise has come its military rise. In the early Cold War years, Asian military forces were primarily lumbering, World War II–type armies whose primary purpose, though never stated, was national consolidation.........

But as national wealth accumulated and the computer revolution took hold, Asian militaries from the oil-rich Middle East to the tiger economies of the Pacific developed full-fledged, military-civilian post-industrial complexes, with missiles and fiber optics and cellular phones. ..........

An unbroken belt of countries from Israel to North Korea (including Syria, Iran, Pakistan, India, and China) has assembled either nuclear or chemical arsenals and is developing ballistic missiles. A multipolar balance of terror stretches over a 6,000-mile arc, cutting across military and political theaters and regional studies departments into which the West divides up Asia. The “death of distance” is upon us, Bracken warns. Take Japan, which ever since North Korea in 1998 fired a missile across it, landing in the Pacific Ocean, is no longer a zone of sanctuary, but an integral part of mainland Asia military space, despite its archipelagic geography.....

China, North Korea, India, Pakistan, and other countries are developing disruptive technologies. In an age of former Third World countries acquiring tactical nuclear weapons, large forward bases like the kind the U.S. military maintained in Saudi Arabia and Kuwait prior to the two Gulf wars may henceforth be vulnerable to enemy attack. Such a development promises to hinder America’s projection of power around the Eurasian rimland, and thus pave the way toward a more unstable, multipolar power arrangement......

Bracken warns that nationalism is “dangerously underrated” by Western observers, who see it as part of a retrograde past that economic and social progress moves us beyond. “The most important issue of the twenty-first century is understanding how nationalism combines with the newly destructive technologies appearing in Asia.” As I’ve said, the new nuclear powers, like Pakistan, India, and China, will have poor and lower-middle-class populations, and this will abet a resentful, hot-blooded nationalism in an age when the new military symbols are not armies but missiles and nuclear weapons—the latest totemic objects of the crowd....

Understanding the map of the twenty-first century means accepting grave contradictions. For while some states become militarily stronger, armed with weapons of mass destruction, others, especially in the Greater Middle East, weaken: they spawn substate armies, tied to specific geographies with all of the cultural and religious tradition which that entails, thus they fight better than state armies on the same territory ever could. Southern Lebanon’s Hezbollah, the former Tamil Tigers of northern Sri Lanka, the Maoist Naxalites in eastern and central India, the various pro-Taliban and other Pushtun tribal groupings in northwestern Pakistan, the Taliban itself in Afghanistan, and the plethora of militias in Iraq, especially during the civil war of 2006–2007, are examples of this trend of terrain-specific substate land forces.
Riaz Haq said…
Missile development, CPEC security termed major successes

The military has enumerated successful tests of various missiles by the army and navy, arrangements for the security of the China-Pakistan Economic Corridor (CPEC) and targeted strikes by the air force on militant hideouts in support of operation Zarb-i-Azb among its accomplishments during 2016.

According to a message released on social media by the Inter-Services Public Relations (ISPR) director general on New Year’s Eve on Saturday, an enhanced version of the Babur cruise missile and the indigenously produced air-launched Ra’ad missile were successfully tested during the year.

The navy test-launched the shore-based anti-ship missile Zarb and fired a surface-to-surface anti-ship missile in the North Arabian Sea from the Sword Class Frigate PNS Aslat.

Arrangements for the actualisation and security of the CPEC, consisting of an 870km road network and raising of a Special Security Division and Task Force 88 for its maritime security were carried out.

According to the ISPR, the navy proved its vigilance and operational preparedness by detecting and blocking an Indian submarine from entering Pakistani waters south of the country’s coast.

Also during the year, the groundbreaking of an air power centre of excellence was carried out to enhance PAF’s capacity to meet future challenges and undertake counterterrorism operations.

The Pakistan Air Force’s C-130 won the best aircraft trophy at the Royal International Tattoo Show in the United Kingdom.
Riaz Haq said…
As #India Lags, The #Pakistan #ETF NYSE:PAK Is At All-Time Highs

From Zacks: For investors seeking momentum, MSCI Pakistan ETF (PAK – Free Report) is probably on their radar now. The fund just hit a 52-week high and is up about 50.2% from its 52-week low price of $12.00/share.

But are more gains in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea on where it might be headed:

PAK in Focus

This product offers exposure to the large and liquid companies in Pakistan by tracking the MSCI All Pakistan Select 25/50 Index. Financials, materials and energy are the top three sectors of the fund with double-digit weight each. The fund charges 0.68% in expense ratio (see: Broad Emerging Market ETFs).

Why the Move?

This Pakistan ETF has been picking up momentum lately on improved capital mobility and liquidity. The country has been working on a turnaround. The country’s economy is growing at a decent rate of approximately 4.5% per annum. The country’s young population could act as a key catalyst to long-term growth.

More Gains Ahead?

It seems that PAK might continue with its strength given a high weighted alpha of 44.10%. As a result, there is definitely still some promise for risk-aggressive investors who want to ride on this surging ETF.

Global X MSCI Pakistan ETF (NYSE:PAK) was trading at $17.96 per share on Thursday morning, down $0.06 (-0.33%). Year-to-date, PAK has gained 2.63%, versus a 1.30% rise in the benchmark S&P 500 index during the same period.

PAK currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #11 of 77 ETFs in the Emerging Markets Equities ETFs category.
Riaz Haq said…
110 #journalists killed in 2015, #India among 3 most dangerous nations. #Pakistan not on danger list via @htTweets

India was among the three most dangerous countries for journalists in 2015, with nine reporters losing their lives during the year, according to the annual report of Reporters Without Borders released on Tuesday.

The media watchdog said these deaths confirmed “India’s position as Asia’s deadliest country for media personnel, ahead of both Pakistan and Afghanistan”.

Only war-torn Iraq and Syria recorded the deaths of more journalists than India. Four of the nine Indian journalists murdered in the past year were killed “for still undetermined reasons”, Reporters Without Borders (RSF) said.

Besides India, the eight other countries where the most journalists were killed are Iraq (11), Syria (10), France (eight), Yemen (eight), Mexico (eight), South Sudan (seven), the Philippines (seven) and Honduras (seven).

A total of 110 journalists were killed in connection with their work or for unclear reasons in 2015, and at least 67 were killed while reporting or because of their work.

“These 67 deaths bring to 787 the total number of journalists killed in connection with their work since 2005,” RSF said in its report.

Indian journalists “daring to cover organised crime and its links with politicians have been exposed to a surge in violence, especially violence of criminal origin, since the start of 2015”, the report said.

Two murders monitored by RSF were linked to illegal mining, a sensitive environmental subject in India. “The inadequacy of the Indian authorities’ response is reinforcing the climate of impunity for violence against journalists,” RSF said.

“After the murder of Sandeep Kothari (the eighth journalist to be killed for work-related reasons in two years), RSF urged the government to establish a national plan for protecting journalists. A response that matches the scale of the threats to journalists is now essential,” it added.

Kothari, a 40-year-old tehsil correspondent for several Jabalpur-based Hindi dailies, belonged to Balaghat district of Madhya Pradesh. He had filed a case against some people to expose the region’s sand mining mafia. His charred body was found at a Nagpur farmhouse on June 21.

While 67 journalists were targeted worldwide because of their work or killed while reporting, RSF said it had not been possible to clearly establish the circumstances or motives of 43 other deaths. Twenty-seven citizen-journalists and seven media workers were also killed in 2015.
Riaz Haq said…
Nestle #Pakistan' Swiss chief says country's #economy poised for rapid accelerating growthé-MD-sees-Pakistan-in-hot-zone-of-high-economic-activity …

Anticipating bright prospects for industry, local head of the global food giant has said that Pakistan seems poised to enter high economic activity ‘hot zone’, potentially moving to post double-digit growth.

“With increasing per capita income, gradual improvement in economic growth, better law and order situation, easing energy crisis, political stability, exponential gains in equity market, massive infrastructural development under China-Pakistan Economic Corridor (CPEC) and other favourable indicators, we are hopeful of entering the hot zone, which tends to open new vistas of robust growth for food and other industries," said Bruno Olierhoek, Managing Director and Chief Executive Officer of Nestlé Pakistan.

Having over Rs 100 billion of turnover, Nestlé Pakistan is one of the leading companies operating in Pakistan and performance of food giant has frequently been referred as a success story at various forums.

Sharing his forward-looking view in an exclusive talk with The News, Olierhoek said,” The local and foreign companies have already started taking interest in expanding their investment in view of the emerging developments.”

“Apart from macroeconomic stability, roads and other infrastructural development, under the CPEC, will greatly improve access to remote areas of Balochistan and other provinces, leading to greater economic activity. The industry is also expecting huge benefits from power projects being constructed as major component of CPEC.”

Olierhoek said the Nestlé Pakistan is optimistic about power shortages coming to an end as well as reduction in the cost of energy, which will eventually cut business cost.

Pledging long term commitment of his company, Olierhoek said, “Nestlé Pakistan attaches great importance to local market that offers limitless resources and possibilities.”

“Having an emerging middle class, a substantial young population and increasingly health conscious people, Pakistan looks eager to offer market penetration after evolving into a hotspot for investment,” he said suggesting the establishment/enforcement of a National Quality Council to ensure uniform standards throughout the country and to further aid investment for food companies.
Riaz Haq said…
#Terrorism data trackers report big decline in #Pakistan violence: 28% fewer incidents, 45% fewer deaths in 2016.

Two Pakistani research groups have noted that the country saw a significant drop in militant violence last year, crediting the military for the decrease in attacks.

The two Islamabad-based groups say that large-scale military operations in the lawless tribal regions bordering Afghanistan, in the chaotic port city of Karachi and the sparsely populated Baluchistan province are behind the drop. But for the trend to continue, they say, authorities need to disband sectarian and anti-Indian extremists based in the populous Punjab province.

The findings, which are based on the groups' records, were released last week and on Sunday.

One of the groups, the Center for Research and Security Studies, said there was a 45 percent drop in violence-related deaths in 2016, compared to the previous year. The Pakistan Institute for Peace Studies, which tallies violent incidents, registered a 28 percent drop in attacks in 2016, compared to 2015.

Still, both organizations tempered the findings by warning that the trend could be halted unless militant groups are disbanded and called for improving relations with neighboring India and Afghanistan.

Prime Minister Nawaz Sharif echoed some of those sentiments last week, when he told a writers' conference that Pakistan needs to create an effective narrative that promotes tolerance.

"We are forgetting how to speak of mutual love, integrity, compassion and empathy," he said. His government introduced legislation in 2016 outlawing hate speech and denying clerics from rival Islamic sects the right to use their loudspeakers at their mosques.

However, Sharif's government has not succeeded in disbanding outlawed sectarian groups that re-emerge later under a different name.

Also, lawmakers from his own Pakistan Muslim League have been seen on campaign platforms with members of the outlawed Sunni extremist group Sipah-e-Sahabah, which has links to the banned Lashkar-e-Jhangvi, another violent Sunni extremist group that has been blamed for several attacks last year, particularly in southwestern Baluchistan.

"A government that is going into an election next year doesn't want to lose votes," said Imtiaz Gul, executive director of the Center for Research and Security Studies, which authored one of the reports. "The banned outfits have madrassas that still operate, they have sympathies and influence."

A mostly Sunni Muslim country, Pakistan has for years been convulsed by brutal sectarian violence that has killed thousands. Most of the victims have been minority Shiite Muslims.

Asadullah Khan, an analyst with Pakistan's Institute of Strategic Studies says that "it isn't enough to ban" militant groups, which then surface under a new name.

"We have to get rid of them altogether," Khan said.

Prominent on the militant landscape dotting Pakistan are also the Afghan Taliban, Pakistan's own Taliban group and its splinters, as well as the feared Haqqani network. Then there are several anti-Indian groups, labelled terrorists by the United States and India — such as Lashkar-e-Taiba, which was banned but remerged as Jamaat-ud-Daawa and Jaish-e-Mohammed.

Pakistan has fought three wars with archrival India, most often over the disputed Himalayan region of Kashmir.
Riaz Haq said…

#Pakistan Beats #India using its strategic geographic location to extract benefits from #America and #China. @forbes

After beating India in equity markets, Pakistan beat India in another metric recently: Geopolitics.

The country's leaders have skillfully leveraged Pakistan's strategic geographic location to extract a series of benefits from America and China.

In fact, the performance of Pakistan's equity markets and geopolitics isn’t reflective of their independence from each other. Geopolitics has been, and will be, a major driver for the country's financial markets.

Back in 2001, Pakistan leveraged its proximity to Afghanistan to extract a big benefit from America: a write off for a big part of its foreign debt--the spark of Pakistan's fifteen-year bull market.

America needed Pakistan as an ally in its war against Afghanistan. And Pakistan's leadership offered to do just that in exchange for the US brokering debt relief for their large external debt - 60 percent of the country’s GDP, with debt serving counting for 30 percent of exports.

“A unilateral default seemed almost inevitable,” writes Marko Dimitrijevic in Frontier Investor (New York: Columbia Business School, 2017). “However, the United States’ post-9/11 collaboration with the Musharraf government to fight terrorism provided an environment conducive for Pakistan to request the rescheduling of its debt.”

Indeed, in December 2001, the Paris club did just that, cutting Pakistan’s debt by $12 billion, with IMF providing the country additional funding.

The rest is history. Pakistan’s currency strengthened as foreign expatriate remittances and foreign capital flowed into the country, with a good chunk of it ending in financial markets -- which took off, until the 2008-9 financial crisis.

Then China came along to re-ignite Pakistan’s market, once again.

Beijing needed a western route to the Middle East, and Africa--China's second continent. Ideologically that is, which can explain why Beijing committed $46 billion to China-Pakistan Economic Corridor (CPEC). In addition, China has been investing in Pakistan’s infrastructure companies.

In a sense, Pakistan’s gain is India’s loss, as China cannot appease both countries at the same time. In fact, it has done quite the opposite: repeatedly blocking India's efforts to join the Nuclear Supplier Group (NSG).

And it has sided openly with Pakistan in the India-Pakistan Kashmir impasse, as evidenced by statements by China’s senior officials on the sidelines of the ongoing 71st session of United Nations General Assembly in New York, as previously discussed in a piece here.

Riaz Haq said…

#Pakistan predicted to be world’s fastest-growing #Muslim #economy in 2017

Pakistan has been forecasted to be the world’s fastest-growing Muslim economy in 2017 ahead of Indonesia, Malaysia, Turkey and Egypt, according to London’s The Economist magazine.

Pakistan’s estimated GDP growth – 5.3% – is also ahead of 4% GDP growth of Israel. This makes Pakistan world’s fifth fastest-growing economy in the world, only behind India and China and two other countries.

The live data, which is updated twice-daily, is published on The Economist website in the form of an interactive table of economic and financial indicators. This data reinforces a Harvard University study which predicted Pakistan to grow by more than 5% in the next decade.

The 2017 forecast of 5.3% growth is, however, lower than the 2016’s 5.7% forecasted growth rate, which means Finance Minister Ishaq Dar must take steps to put economy on the path of irreversible growth.

In 2014, The Economist had forecasted Pakistan to be world’s sixth fastest-growing country.

The 2017 forecast of 5.3% growth is, however, lower than the 2016’s 5.7% forecasted growth rate, which means Finance Minister Ishaq Dar must take steps to put economy on the path of irreversible growth.

In 2014, The Economist had forecasted Pakistan to be world’s sixth fastest-growing country.
Riaz Haq said…
#Obama's actions speak louder than words. 3 US bombs an hour were dropped in 2016 on 7 Muslim nations incl #Pakistan

The U.S. dropped an average of 72 bombs every day — the equivalent of three an hour — in 2016, according to an analysis of American strikes around the world.

The report from the Council of Foreign Relations comes as Barack Obama finishes up his presidency — one that began with promises to withdraw from international conflicts.

According to the New York City-based think tank, 26,171 bombs were dropped on Iraq, Syria, Afghanistan, Libya, Yemen, Somalia and Pakistan during the year.

CFR warned that its estimates were "undoubtedly low, considering reliable data is only available for airstrikes in Pakistan, Yemen, Somalia, and Libya, and a single 'strike,' according to the Pentagon's definition, can involve multiple bombs or munitions."

Related: U.S. Airstrikes Kill Twice the Civilians Previously Thought

Some 24,287 bombs were used in Iraq and Syria, where the U.S. is helping drive ISIS militants from swaths of both countries. In 2015, the U.S. dropped 22,110 bombs in Iraq and Syria, CFR reported.

Last year saw a sharp uptick in strikes in Afghanistan, with 1,337 compared with 947 in 2015, CFR found.

The study, which drew data from a variety of military and press sources, showed that three bombs were dropped on Pakistan during 2016, 14 in Somalia and 34 in Yemen.

A similar study looking at 2015 showed that 11 bombs were dropped in Pakistan during the year, 58 in Yemen and 18 in Somalia. The 2015 analysis did not include Libya.

When he was campaigning for president in 2008, Obama pledged that when he became commander-in-chief he would "set a new goal on day one: I will end [the Iraq] war."

Upon accepting the Democratic nomination that year, Obama again outlined priorities that would make the country safer, saying: "I will end this war in Iraq responsibly, and finish the fight against al-Qaeda and the Taliban in Afghanistan."

However, ISIS later seized parts of Syria and Iraq — and the Taliban won back territory in Afghanistan as the number of NATO troops in the country dwindled.
Riaz Haq said…
#Remittances to #Pakistan $9.46 bn in July-Dec 2016, down 2.37% in 1st half FY17. $1.58 bn in Dec, 16, down 2%.

KARACHI: Overseas Pakistanis sent home $9.46 billion in the first half of 2016-17, down 2.37 per cent from a year ago.

According to data released by the State Bank of Pakistan (SBP) on Tuesday, remittances received in December alone amounted to $1.58bn, which reflects a decline of 2pc on both monthly and annual bases.

Remittances provide the current account balance with critical support. Inflows from overseas increased 6.4pc year-on-year to almost $20bn in 2015-16. But growth in remittances turned negative in the beginning of the current fiscal year, with the transfer of funds from the Gulf region, United States and United Kingdom registering notable declines.

The central bank has dubbed the subdued growth in remittances “the new normal”.

Over one-fourth of remittances received during the six months originated from Saudi Arabia. Inflows from Pakistani workers based in the oil-rich nation in July-Dec amounted to $2.73bn, down 5.5pc from a year ago.

The second-largest contribution to remittances was from workers based in the United Arab Emirates. They sent home $2.12bn, although the figure is 2.5pc smaller than the funds received in the same six months of the preceding year.

Remittances sent by workers based in the United States declined 10.8pc year-on-year to $1.16bn. The transfer of funds from UK-based workers remained $1.1bn, down 12.5pc from a year ago. These two countries – along with six Gulf nations, namely Saudi Arabia, UAE, Bahrain, Kuwait, Qatar and Oman — form the main corridor of remittances.

In a recent publication, the SBP blamed low international oil prices and the tightening of US-backed anti-money laundering/anti-terrorist financing laws for global correspondent banking, which is at the centre of the global remittance transfer business, for the recent disruption in the flow of funds from overseas.

As for remittances from the United Kingdom, the central bank noted the “sizable depreciation” in the British currency post-Brexit means inflows from the European nation will be lower in dollar terms even if Pakistani workers keep sending the same amount.

With regard to the decline in remittances from the Gulf countries, the SBP believes the effects of fiscal consolidation in oil-rich nations are becoming visible on the pattern of fund transfers.

Limited construction activities in the Gulf region are likely to leave a long-term impact on remittances sent by Pakistani workers. Data shows the gross number of Pakistanis who went to the Gulf countries declined 16.4pc in July-Sept last year on an annual basis.

The restrained fiscal spending in the Arab world is expected to dampen demand for low-skilled labourers, according to the SBP, whereas the “localisation requirements” will limit opportunities for high-skilled migrants.

Riaz Haq said…
#Pakistan gasoline consumption up 18% in 2016. …

Pakistan's gasoline demand averaged 557,000 mt/month over July-October, according to latest government data. This was up sharply from 365,000 mt/month over the full fiscal year 2015-2016 (July-June).

The country (Pakistan) imported 4.2 million mt of gasoline over January-November this year, 18% higher than the same period of 2015.

India's gasoline demand rose 12.6% year on year to 21.69 million mt (483,000 b/d) over January-November 2016 and is expected to maintain the same pace in 2017. India exported 15 million mt (334,500 b/d) of gasoline over the same period, up 4.7% year on year.
Riaz Haq said…
#WorldBank raises #Pakistan’s #GDP growth forecast to 5.2% in FY17, 5.5% in 2018 and 5.8% in 2019

ISLAMABAD: The World Bank has revised Pakistan’s growth rate upwards to 5.2% for fiscal year 2017 and 5.5% for 2018.

It previously estimated growth in Pakistan’s gross domestic product (GDP) at 5% and 5.4% for FY17 and FY18, respectively.

The report ‘Global Economic Prospects; weak investment in uncertain times’, states that the uptake in activity is spurred by a combination of low commodity prices, increasing infrastructure spending, and reforms that lifted domestic demand and improved the business climate.

In Pakistan, growth is forecast to accelerate from 5.5% in fiscal year 2018 to 5.8% in fiscal year 2019-20, reflecting improvements in agriculture, infrastructure, energy and external demand.

The report further mentioned the successful conclusion of the IMF Extended Fund Facility (EFF), aimed at supporting reforms and reducing fiscal and external sector vulnerabilities, lifted consumer and investor confidence.

The China-Pakistan Economic Corridor (CPEC) project is also tipped to increase investment in the medium-term, and alleviate transportation bottlenecks and electricity shortages.

Earlier in November, whilst releasing its report ‘Pakistan Development Update – Making growth matter’ the World Bank had projected Pakistan’s economy to grow at 5% in the ongoing fiscal year, meaning that the country was to miss the government-set target of 5.4%.

The Washington-based lender, in that report, added that the country’s economy could see a growth of 5.4% in FY18 on the back of continued mushroom growth in the services sector, recovery of agriculture and uptick in infrastructure investment.

“The services sector, which comprises more than half of the economy, is expected to be the primary source of growth,” stated report.

Additionally World Bank Country Director for Pakistan, Patchamuthu Illangovan, has stressed on the need for increased investment in social sectors like health, education and nutrition. “All this would lead to a vibrant and dynamic society as well as the economy,” he has stated.
Riaz Haq said…
#India dismayed at #UK support to #China-#Pakistan Economic Corridor. #CPEC …

India will convey its disappointment with the United Kingdom’s support to the proposed China-Pakistan Economic Corridor (CPEC).

India will voice its concerns about the British government's move to encourage UK companies to invest in projects along the CPEC.

Corridor areas

New Delhi is opposed to the CPEC as it is set to pass through areas, which India accused Pakistan of illegally occupying in Kashmir, sources told DH.

The UK formally expressed interest in the CPEC during the recent visit to Pakistan of Alok Sharma, Parliamentary Under Secretary of State to the Foreign and Commonwealth Office (Minister for Asia and the Pacific) of British government.
Riaz Haq said…
Top marks in 1st term see #NawazSharif eyeing 2018 re-election in #Pakistan- #economy #security Nikkei Asian Review

In August, the country completed the International Monetary Fund's Extended Fund Facility program, which provided $6.4 billion in financial aid over three years on condition the country undertakes certain reforms, including fiscal austerity and privatization measures. Macroeconomic indexes are up across the board, and relations with the U.S. and the wider international community have improved.

Public order, which has long plagued the entire country, is normalizing thanks to the military's anti-terrorism campaign.

Although it can only be described as reaching the halfway point in its efforts to promote exports and manufacturing, reform the tax code and privatize state-run companies, Pakistan's recovery is undoubtedly gathering pace.

Gross domestic product growth fell short of the country's 5% target for fiscal 2016 -- which ended in June -- due mainly to a poor harvest of the primary agricultural product, cotton. But for fiscal 2017, the country is confidently projecting growth above 5%. The consumer price index, which for a time saw double-digit annual growth, fell to 2.9% on average in fiscal 2016. The government's annual deficit has fallen from 8.2% in fiscal 2013 to 4.6% of GDP.

Under Sharif, the ruling Pakistan Muslim League (Nawaz) party, or PML-N has focused on building infrastructure and public transportation systems. It has also made certain progress, mainly in its stronghold of Punjab, developing agricultural areas and addressing unemployment.

The centerpiece of its political campaign is the China Pakistan Economic Corridor project, a comprehensive infrastructure program relying on financial help from China. Investment in CPEC projects totals $51 billion, mainly for the building of power plants, but also encompassing roads, ports, railroads and airports, and offers hope of spurring industry nationwide.

"There's a significant improvement both on the economic and security sides. Democracy is also taking root," said Arif Habib, CEO of leading conglomerate Arif Habib group, when asked about the performance of the Sharif administration. "The media is free, and the judiciary system is also improving."

Abdul Aleem, secretary-general of the Overseas Investors Chamber of Commerce and Industry, comprising 195 foreign companies and other organizations, said "The government is very strong," although "commodity prices, especially oil, are the biggest risk." As for the sustainability of the anti-terrorism strategy, he said, "I don't think the Army's policy will change. And the relationship with the civilian government will be better."

"The current government is spending a lot of money on infrastructure and energy, which is deeply requisite for business growth and development," commented Shahrukh Hasan, group managing director of leading media company Jang group, which owns news channel Geo TV and the English-language paper The News.

Foreign policy decisions in Pakistan are often intertwined with the priorities of the military, especially with regard to the U.S. and India. Asked about new Army Chief Gen. Qamar Javed Bajwa, Hasan sees positive signals in his attitude toward relations with India.

Another positive for Hasan is the appointment of a former Karachi Corps Commander, "a good person with an open mind and liberal views," as director general of the military's powerful Inter-Services Intelligence agency.
Riaz Haq said…
78% of #US companies in #Pakistan plan to increase #investment in 2017: survey. #FDI … via @epakistantoday

A perception survey conducted by the American Business Council showed that there was an improvement of over 30% in the law and order situation from 2015-16.

Over 78% of respondents have indicated that they plan to invest in Pakistan over the next 12 months as compared to 65% in 2015 and 83% are optimistic about the long term economic climate.

The members have however separately commented about the government’s tendency to introduce mini budgets as well as sudden changes in policies or rules during the course of a fiscal year. “Such steps negatively impact new as well as existing investments,” the members stated.

The perception survey allowed ABC members to rate their satisfaction on various economic, regulatory and political factors that affect the performance and growth of businesses operating in Pakistan over 2015-16.

The business climate was rated on each of the various factors influencing it, including implementation and consistency of trade and competition policies, government development budget, domestic market, internal and external political climate, and law and order.

For 2015-16, the vast majority of respondents rated the business climate of Pakistan as satisfactory with only 8% giving it a poor rating. This is a marked improvement over 2014-15 when 11% of participants rated the business climate as poor. The overall positive perception of American investors reveals an expectation of some economic stability and an improvement in Pakistan’s economic environment.

The participants were also asked to rate the performance of various ministries directly affecting the business climate. In this regard, the overall trend reflects a slight improvement in the performance of various ministries from last year.

The Ministry of Petroleum and Natural Resource showed a marked improvement with 78% of participants reporting the performance as fair and 16% reporting it as poor. In 2014-15, 46% rated the performance of this ministry as fair and 51% rated it poorly.

American Business Council of Pakistan President Sami Ahmed said, “Our members are positive and remain committed to Pakistan.” Ahmed added that international standing and perception is extremely important as Pakistan competes with other Asian players to attract foreign capital in the form of trade exports, human resources, and most importantly, direct foreign investment.

The ABC is one of the largest investor groups in Pakistan with 67 members, most of whom represent Fortune 500 companies. They operate in various sectors including healthcare, financial services, information technology, chemicals & fertilizers, energy, FMCG, food & beverage, oil, and others.

ABC members have cumulative revenues of US $4.0 billion. Their contribution to the National Exchequer, through direct/indirect taxes is approximately Rs 102 billion. They exported goods worth Rs 6.60 billion during 2015, and directly employ over 34,000 people, with 140,000 dependents, and indirectly employ approximately 1 million people through their networks of agents, distributors, contractors, etc.

The ABC is affiliated with the Federation of Pakistan Chambers of Commerce & Industry (FPCCI) and is a member of the US Chamber of Commerce (USCC), Washington D C and the Asia-Pacific Council of American Chambers of Commerce (APCAC). ABC also has a close working relationship with the US-Pakistan Business Council, Washington, which is a component of the USCC.

Riaz Haq said…
17 predictions for Pakistan’s economy in 2017

by Wali Zahid

As Pakistan continues its march from being a frontier economy to becoming an emerging market, 2017 may be the best year in the country’s 70-year-long history. From increase in foreign investment, creation of Export-Import Bank to likely changes in the auto industry, here’s what we predict will happen to Pakistan’s economy this year.

GDP growth: Although gross domestic product (GDP) growth forecasts by International Monetary Fund, World Bank and federal budget vary, Pakistan’s GDP is likely to grow by 4.7 per cent this year. The annual GDP may increase from $270 billion to around $300 billion and for the first time, the Purchasing Power Parity may cross the $1trillion mark. Pakistan is currently 40th largest economy in the world and our ranking may improve by a point or two.
WEF report: Pakistan leaves India behind in IDI

Debt: National debt, currently at $73 billion, will continue to grow.

Debt-to-GDP ratio: Currently at 64.8 per cent, it may decline slightly.

Foreign exchange: Reserves will continue to be in the region of $23-24 billion.

Stock market: Pakistan will enter MSCI’s Emerging Markets category in May, meaning larger amounts will inflow. MSCI is a leading provider of international investment decision support tools. In 2016, Pakistan Stock Exchange (PSX) provided 46 per cent returns. KSE-100 benchmark index is also likely to cross 55,000 points from current nearly 48,000 points. Forty per cent stakes in PSX will go to Chinese consortium and this is likely to bring large institutional investors from other countries.

Retail: More large shopping malls will be built or become operational across major urban centres. Superstore chains will open new stores in unprecedented three-digit numbers.

Over 78% American companies say willing to invest more in Pakistan

Tax filers: Number of active tax payers/filers may reach 1.2 million.

Exports: Although IT exports are picking up, Pakistani exports will continue its declining trend, mostly because of poor cotton production, our low global competitiveness and travel advisories.

Export-Import Bank: The bank may be functional before June to facilitate exporters and importers after State Bank of Pakistan licenses it.

Foreign Direct Investment: FDI this year may cross the $1-billion mark.

Remittances: After a drop in 2016, remittances may pick up to reach $20billion mark.

Inflation: It may remain between four and five per cent as low oil prices are expected to stay stable.

Agriculture: Agriculture sector will continue to remain affected because of declining cotton production.

Chinese firms willing to invest in Pakistan

Finance: The sector will increase focus on financial inclusion, generating opportunities for micro-finance and commercial banks.

Banking: Smart banking, mobile banking and branchless banking will increase.

Ease of doing business index: Pakistan, at 144 out of 190 countries, was among top 10 global improvers in World Bank’s 2017 Doing Business rankings. In the 2018 ranking, it will improve further.

Auto industry: Pakistan may need additional 100,000 trucks to meet the CPEC-related material and freight transport needs and it is unlikely that this demand is planned and met in time. Demand for locally manufactured new and imported used cars will continue to rise. Although there’s interest from Volkswagen, Kia, Renault and Nissan for manufacturing plants in Pakistan, the production will not start this year which also means prices of cars will not come down as current producers – Toyota, Honda and Suzuki – remain in monopolistic situation.
Riaz Haq said…
#Pakistan #banks show strong growth. #Deposits up 20%, #loans rise 17% in 2016.

Banks advanced Rs5.6 trillion to the private sector in 2016, which is 17 per cent more than 2015
Deposits at Pakistan's commercial banks reached Rs11.2 trillion as of December 30, 2016. At this level, it works out as a 20.4 per cent year-on-year growth in deposits compared to the last three years.

Add to it the good news that banks advanced Rs5.6 trillion to the private sector in 2016, which is 17 per cent more than 2015 when only Rs4.8 trillion was sanctioned.

Banking and equity sector analyst Umair Naseer of Topline Securities said this is significantly higher than the historical average growth of 12 per cent in the past three years. He added that the strong deposit growth bodes well for banks as it remains the key earning driver in a low interest rate environment.

This is a success story for the banking sector as it took place at a time when some sectors of the economy, including the biggest one such as textiles - are still struggling to match their good performance in the past. At the same time, exports, hit by the international crash of oil and commodity prices and lower domestic output, declined from $24 billion to $19 billion in 2016.

The easy money policy of the State Bank of Pakistan (SBP), the central bank, has brought down the interest rate to 5.75 per cent - the lowest in 42 years. The banks have also been slashing the profit rate payable to depositors. This, in turn, was holding up a major growth in deposits.

The government of Pakistan, financial institutions and economists firmly believe that commercial banks should redouble their efforts and undertake a major deposit mobilisation campaign so that they can lend more money to the credit-starved private sector, including key industries such as textiles and the stagnant export sector. The government has to share part of the blame for credit shortage in the private sector as it has been borrowing heavily to fill its budgetary gap.

The current year will need redoubling of the deposit mobilisation efforts for growth as there are already some economists who feel the rate may be reduced to the range of 13 to 15 per cent. This is because, in the recent past, the government deposited larger amounts of money in these banks to earn larger profits. But this practice is almost over.

The SBP recently reported that bank investments rose eight per cent to Rs7.2 trillion last year. This helped the economy to look up after years of slowdown. It also confirms the fact that the economy is looking up under pro-business Prime Minister Nawaz Sharif, whose party will face new parliamentary elections in the first half of 2018. Other key elements which can help him win these elections will be the fast-track implementation of the $61 billion Chinese investment in the China Pakistan Economic Corridor (CPEC).

Other positive factors are the recently announced FDI inflow from the UAE, Saudi Arabia and other countries, attracted by CPEC and the improved investment climate in Pakistan, and revival of the overall economy.

The Chinese investment in financial and equity sectors and energy is now very substantial. A consortium of three Chinese and two Pakistani companies have bought 40 per cent shares of the PSX - the Karachi Stock Exchange, for $80 million. Besides attracting more Chinese FDI, it is likely to encourage other foreign countries and companies to invest in Pakistani shares and the financial market.

Riaz Haq said…
Inter-sectoral imbalances

The growth rate and the share of the three sectors — agriculture, industry and service — varies from year to year but their contribution to GDP, by and large, remains within a narrow range: close to 55pc for services, less than 25pc for agriculture and just over 20pc for industry.

But over the three successive years, industrial growth has equaled or outstripped expansion in the services sector as well as the GDP growth rate in 2016. To quote the State Bank of Pakistan’s data, industry grew at the same pace as services (4.5pc) in FY14 but exceeded the latter’s rate in FY15 (4.8pc against 4.3pc) and with a much wider margin (6.8pc against 5.7pc) in fiscal year 2016. The industrial expansion at 6.7pc surpassed the real GDP growth rate of 4.7pc last year.

In the first quarter of this fiscal year large scale manufacturing remained subdued with a growth rate of 2.2pc down from 3.9pc in the same period of last year but rebounded in November 2016 with an annualised growth rate of 8pc.

The latest trend is likely to continue because of fiscal stimulus provided in the current year’s federal budget, the recent surge in imports of machinery for balancing and modernisation of existing manufacturing facilities, and improvements in the security situation and energy supply.

The manufacturing sector has also received an impetus from an Rs180bn export package announced earlier this month by Prime Minister Nawaz Sharif.

On the other hand, agricultural growth — which remained stable at 2.5pc in FY2014 and FY2015 — dropped to minus 0.2pc in FY2016, mainly because of the failure of cotton crop in Punjab.

The various incentives and subsidies by the federal and provincial governments are reversing the negative growth trend in agriculture this fiscal year. Under pressure by farmers, the official announcement for discontinuation of cash subsidy to growers last week was annulled within 72 hours.

Official policies are now helping commodity producers gain some lost ground, but producers need to stand on their feet to make bigger strides towards achieving a more balanced inter-sectoral growth and improving economic fundamentals.
Riaz Haq said…
#Pakistan Army Winning the war on #terror. #ZarbeAzb #RaddulFasaad via @MailOnline

Winning the war on terror: From the badlands of Pakistan where Al Qaeda planned their attacks on Britain, PETER OBORNE, the first Western journalist to visit this epicentre of terror files a riveting dispatch

For more than a decade, the Pakistani tribal area of North Waziristan has been the deadly epicentre of global terror.
This mountainous area on the remote Afghan border was the secure base from which Taliban and Al Qaeda warlords launched attacks across the world.
Many have been aimed at Britain.

For example, it was from here that Rashid Rauf (the Al Qaeda terrorist who at the time was described as ‘one of the world’s most wanted’) masterminded the 7/7 London bombings in 2005 which killed 52 and injured more than 770 people.
Rauf — born in Pakistan but radicalised by a sect in Birmingham in his late teens after moving to Britain in the early Eighties — was also suspected of being the ringleader of a foiled plot to detonate liquid explosives on a transatlantic plane in 2006, which a senior British policeman said would have caused ‘mass murder on an unimaginable scale’.

I have travelled regularly to Pakistan ever since the darkest days of the country’s descent into terror. At times, the country seemed on the verge of collapse. Indeed, at one point it was regarded by global intelligence agencies, including Britain’s MI6, as the most dangerous state in the world.
This week, I was the first Western journalist in many years to travel to the North Waziristan capital, Miranshah.
Until recently, it was from these streets that Taliban commanders ordered public beheadings and Al Qaeda chiefs groomed innocent children as young as ten to be suicide bombers.
It seemed unimaginable back then that Al Qaeda and the Taliban would be driven out of Pakistan’s tribal territories. Yet the Pakistan army now claims that every last Taliban fighter has been expelled.

It is nothing short of miraculous that Pakistan survived after so many atrocities and disasters.
This, then, is a story of optimism; of how the men of terror can be taken on and defeated.
After a sustained assault, Pakistani troops managed to take control of Miranshah. The terrorists fled — but left a scene of heartbreaking devastation.
Entire streets were reduced to rubble. The city’s ancient market, once home to more than 600 shops, was flattened.

The blight of terrorism in the area dates back to 9/11 in 2001, and the subsequent invasion of Afghanistan by the Western allies in revenge for the attacks on America.
In order to escape pursuing British and U.S. troops, Taliban and Al Qaeda forces, including the latter group’s leader Osama Bin Laden, fled from their traditional strongholds in Afghanistan into the tribal areas of Pakistan.
They were safe here under the protection of local tribes, many of whom had strong links to Afghanistan.
In due course, the Taliban used their new bases in Waziristan to attack British and American forces in Afghanistan.
Thousands of foreign fighters, including British Jihadis such as Rashid Rauf, who had been a student at Portsmouth University and had worked for a bakery in Birmingham, flocked to join them.
The Pakistan army was duly placed under huge pressure from the West to attack the Taliban in these tribal hideouts.
After protracted battles, the Pakistan military finally managed to clear the region of its last terrorist stronghold. But not before the Taliban had launched numerous reprisal attacks inside Pakistan itself, engulfing the country in a bloody civil war that claimed tens of thousands of lives.
Riaz Haq said…
Global Center for Combating Extremism in #Riyadh uses new ways. #moderation #terrorism #Trump via @AlArabiya_Eng

- The center is established as a result of the international cooperation in facing the extreme ideology leading to terrorism, the world’s first common enemy.

- It was founded by a number of countries who chose Riyadh as its headquarters in confronting extreme ideologies by monitoring and analyzing it, to confront and prevent it, cooperate with the governments and organizations to prevail and promote a culture of moderation.

- The center was established on three basic pillars: confronting extremism by the latest intellectual, media and numerical methods and means

- The center has developed innovative techniques that can monitor, process and analyze extremists’ speeches with high accuracy, all phases of data processing and analysis are done in no more than six seconds once the data or comments are posted on the Internet, allowing unprecedented levels of facing extremist activities in the digital world.

- The Center works to refute the hate and extremist speech and promote concepts of moderation, accepting the other, and the production of media content that confront the content of the radical thoughts in order to defy it, and reveal its promotional propaganda.

- The center includes a number of international experts specialized and prominent in confronting extremist speech on all the traditional media means and electronic world.

- The center operates in the extremists’ most widely used languages and dialects. Advanced analytical models are being developed to locate digital media platforms, highlight extremist focal point, and secret sources of polarization and acquiring activities.

- The importance of establishing the center lies in that it is the first time that the world countries seriously come together to face the threat of extremism, which poses a threat to the communities and endanger them, therefore it is the center’s duty to fight together to win and to be able to protect people from its danger.

- The selection of the (12) representatives of the Board of Directors from states and organizations; reflects the independence of the center's work, which is characterized by a governance system that applies international management best practices of major international organizations, which allows neutrality, flexibility, efficiency and transparency to fulfill the Center's functions and achieve its objectives.

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