Pakistan Country Risk Report

Providing comprehensive data and in-depth analysis of political, financial and economic risk.

Report includes: BMI's Core Views, 10-year Forecasts, BMI's Economic Risk Index, Political Stability and Risk Index, Long-term Political Outlook, Operational Risk Index, SWOT Analysis and Structural Economic Sections

Why you should buy this report

  • Understand and measure the political, business environment and operational risks to your company
  • Gain insight on emerging trends that could support, strengthen or disrupt your activities in the market
  • Benefit from 10-year macroeconomic forecasts and insight into the structural characteristics of the economy
  • Get the long-term political outlook and explore possible scenarios for change
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Pakistan Country Risk Report
Product Price
$1,195.00

Core Views:

  • The March 27 attack in the Punjab capital of Lahore is a major blow to the government's hitherto progress in the fight against domestic terrorism. While terrorist activity remains on downtrend, the latest attack will be a blow to the county's overall business environment as the government seeks to attract foreign investment amid its somewhat stalled economic reform and privatisation drive.

  • With the help of reduced oil import costs and increased remittances, Pakistan is seeing an increase in its savings rate, supporting an increase in investment. The textile and automotive sectors appear set to be the main beneficiaries of these trends, although the recent Lahore terror attacks pose a risk to business confidence.

  • While we continue to see slight weakness in the Pakistani rupee over the course of 2016, this weakness will likely be very minor compared with prior years. The sharp decline in global crude oil prices has substantially improved the outlook for the trade balance, while the country's security situation has continued to improve. Our end-FY2015/16 target is PKR107.00/USD, while our end-FY2016/17 target is PKR109.67/USD.

  • Pakistan's balance of payments continue to benefit from low oil prices, which have allowed non-oil imports to surge and should be supportive of economic growth. Meanwhile, the relatively strong performance of textile exports is an early sign of the positive impact of the increased availability of energy in the country.

  • The SBP is likely to maintain its policy rate at 6.00% as inflationary pressures rise over the coming month, before beginning its hiking cycle in fiscal year 2016/17. Supply side reforms, however, will prevent inflationary pressures from rising rapidly over the coming years.

  • Despite the progress made in terms of narrowing the fiscal deficit, the Pakistani government has thus far failed to get the privatisation drive off the ground. A successful privatisation of Pakistan International Airways would provide fresh impetus to the government's reform drive, which despite impressive progress in recent years, has begun to flag.

Major Forecast Changes

  • We have not made any significant revisions to our forecasts for Pakistan's economy, but have written a new 10-year forecast article looking at several domestic and external factors that could see the economy break out of its low-savings, low-income equilibrium over the coming years.

Key Risks

  • With the recent terrorist attack in the Punjab capital of Lahore, security concerns are once again heighted, and there is a risk that the progress made over the past year in terms of fighting terrorism could prove transitory.

  • The Pakistani economy faces a sweet spot of being very exposed to global energy prices yet relatively shielded from global growth weakness, suggesting there is upside potential for growth from the ongoing decline in oil import costs.

Macroeconomic Forecasts (Pakistan 2014-2017)
Indicator 2014 2015e 2016f 2017f
National Sources/BMI
Real GDP growth, % y-o-y 4.0 4.2 4.3 4.2
Nominal GDP, USDbn 235.0 254.7 266.9 287.3
Consumer price inflation, % y-o-y, eop 8.2 3.2 5.5 6.0
Exchange rate PKR/USD, eop 100.52 104.73 107.87 111.11
Budget balance, % of GDP -5.5 -5.3 -4.8 -4.4
Current account balance, % of GDP -1.3 -1.0 1.2 1.0
Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks
5
Chapter 1: Economic Outlook
7
SWOT Analysis
7
BMI Economic Risk Index
7
Economic Growth Outlook
8
Upside Growth Potential Amid Energy And Security Gains
8
GDP By Expenditure Outlook
9
TABLE: GDP GROWTH FORECASTS
9
TABLE: PRIVATE CONSUMPTION FORECASTS
9
Monetary Policy
10
Inflation Bottoming Out
10
TABLE: GOVERNMENT CONSUMPTION FORECASTS
10
TABLE: FIXED INVESTMENT FORECASTS
10
TABLE: NET EXPORTS FORECASTS
10
Monetary Policy Framework
11
External Trade And Investment Outlook
12
Oil Price Drop Providing Major Support
12
Outlook On External Position
13
TABLE: NET EXPORT AND IMPORT PARTNERS
13
TABLE: MAIN IMPORTS AND EXPORTS
14
TABLE: CAPITAL & FINANCIAL ACCOUNT BALANCE
14
Fiscal Policy And Public Debt Outlook
15
Budget Remain On Course Despite Setbacks
15
Structural Fiscal Position
15
TABLE: MAIN REVENUE AND EXPENDITURE CATEGORIES
15
Currency Forecast
16
PKR: Stability With A Weakening Bias
16
TABLE: BMI CURRENCY FORECAST
17
Chapter 2: 10-Year Forecast
19
The Pakistani Economy To 2025
19
South Asia's Serial Underperformer
19
TABLE: LONG-TERM MACROECONOMIC FORECASTS
19
Chapter 3: Political Outlook
21
SWOT Analysis
21
BMI Political Risk Index
21
Domestics Politics
22
One Year On, Terror Strategy Bearing Fruit
22
TABLE: POLITICAL OVERVIEW
22
Long-Term Political Outlook
24
Instability To Prevail, But Outright Collapse Unlikely
24
TABLE: SCENARIO MATRIX: EVOLUTION OF STATE
24
TABLE: SCENARIO MATRIX: CENTRIFUGAL VERSUS CENTRIPETAL FORCES
25
Chapter 4: Operational Risk
27
SWOT Analysis
27
Operational Risk Index
27
TABLE: OPERATIONAL RISK
28
Trade Procedures And Governance
29
TABLE: TRADE PROCEDURES AND GOVERNANCE RISK
29
TABLE: EXPORT AND IMPORT DOCUMENTS
30
TABLE: TRADE PROCEDURES BREAKDOWN
30
Vulnerability To Crime
31
Chapter 5: BMI Global Macro Outlook
35
Global Macro Outlook
35
Unfinished Business In 2016
35
TABLE: GLOBAL ASSUMPTIONS
35
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
36
TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
36
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %
37
TABLE: PAKISTAN - MACROECONOMIC DATA & FORECASTS
39

Assess your risk exposure in Pakistan with our 100% independent forecasts assessing the pace and stability of this key market. Backed by trusted data from BMI Research's 52 million data point economic forecast model, this report will allow you to measure political, economic, business environment and operational risks in Pakistan with confidence.

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