Pakistan Country Risk Report

Published 22 July 2015 | Quarterly

  • 50 pages
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  • Includes 3 free updated quarterly reports
$1,195.00
Pakistan Country Risk Report

Core Views:

  • The Pakistani military is finally making progress in tackling terrorism stemming from the northwestern tribal regions, with the civilian casualty rate falling to eight-year lows. However, the fall in terrorist activity could turn out to be a temporary lull as displaced militants regroup. Meanwhile, little progress has been made in targeting organisations operating in Pakistan that focus their attacks outside of the country.

  • Despite missing the government's target, Pakistan's real GDP growth came in at 4.2% in fiscal year 2014/2015, in line with our forecast, and marking an acceleration from FY2013/14. Improvements in the areas of fiscal reform, energy supply and security should support a slight pick-up in growth over the coming fiscal year, and we forecast real GDP growth to come in at 4.3% in FY2015/16.

  • We believe that the 100 basis point (bps) cut by the State Bank of Pakistan (SBP) will mark the end of its easing cycle as inflation should begin to bottom out over the coming months. The risk is that if the central bank cuts even further, it would likely have a counterproductive impact on real GDP growth while stoking inflation.

  • Despite the strong likelihood that the government will miss its budget deficit target of 4.9% of GDP, progress is still being made. The IMF is likely to put pressure on the government to raise tax revenues by broadening the tax base, which will free up fiscal space for more growth-enhancing development expenditure.

  • The Pakistani rupee continues to benefit from an improving current account picture and renewed interest in the financial account. We believe the State Bank of Pakistan (SBP) has the capacity to maintain the soft peg in the near term, but will opt for minor and gradual depreciation over the longer term in order to maintain competitiveness amid a higher inflation rate relative to its trading partners.

Major Forecast Changes:

  • We have slightly revised up our long term real GDP growth forecast...

Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Index
7
Domestic Politics
8
Progress Made On Combating Terrorism, But Risks Remain
8
Table: Political Overview
8
Table: SCENARIO MATRIX: EVOLUTION OF STATE
9
Table: SCENARIO MATRIX: CENTRIFUGAL VERSUS CENTRIPETAL FORCES
9
Long-Term Political Outlook
10
Instability To Prevail, But Outright Collapse Unlikely
10
Chapter 2: Economic Outlook
13
SWOT Analysis
13
BMI Economic Risk Index
13
Economic Activity
14
Positive Signs Despite Growth Miss
14
table: Economic Activity
14
Monetary Policy
15
Latest Cut To Mark End Of Easing Cycle
15
table: Monetary Policy
16
Fiscal Policy
17
Deficit Target In Jeopardy But Progress Being Made
17
table: Fiscal Policy
18
Exchange Rate Policy
18
PKR: SBP To Keep A Tight Grip On Rupee
18
table: Exch ange Rate
19
Table: BMI CURRENCY FORECAST
19
Chapter 3: 10-Year Forecast
21
The Pakistani Economy To 2024
21
South Asia's Serial Underperformer
21
Table: Long-Term Macroeconomic Forecasts
21
Chapter 4: Operational Risk
23
SWOT Analysis
23
Operational Risk Index
23
Operational Risk
24
Table: Operational Risk
24
Market Size And Utilities
25
Table: Asia - Market Size and Utilities Risk
26
International Security Risk
31
Table: Asia - Interstate Security Risk
32
Chapter 5: Key Sectors
35
Pharmaceuticals & Healthcare
35
table: Pharmaceutic al Sales, Historical Data And Forecasts
36
table: Healthcare Expenditure Trends , Historical Data And Forecasts
37
table: Government HealtH Expenditure Trends, Historical Data And Forecasts
37
table: Private Healthcare Expenditure Trends , Historical Data And Forecasts
37
Telecommunications
38
TABLE : Telecoms Sector - Historical Data & Forecasts
39
Other Key Sectors
41
table: Oil and Gas Sector Key Indicators
41
table: Defence and Security Sector Key Indicators
41
table: Infrastructure Sector Key Indicators
41
table: Food and Drink Sector Key Indicators
42
table: Autos Sector Key Indicators
42
table: Freight Key Indicators
42
Chapter 6: BMI Global Macro Outlook
43
Global Outlook
43
Event Risk Mounting But Manageable
43
Table: Global Assumptions
43
Table: Developed States, Real GDP GrowtH, %
44
Table: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
44
Table: Emerging Markets , Real GDP Growth , %
45

The Pakistan Country Risk Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Pakistan. It is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of Pakistan's economic, political and financial prospects through end-2019, just published by award-winning forecasters, BMI  Research.

Key Uses

  • Forecast the pace and stability of Pakistan's economic and industry growth through end-2019.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the operating environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise Pakistan's country risks against regional peers using BMI's country comparative Risk Index system.
  • Evaluate external threats to doing business in Pakistan, including currency volatility, the commodity price boom and protectionist policies.

The Pakistan Country Risk Report by BMI  Research includes four major sections: Economic Outlook, Political Outlook, Operational Risk and Key Sector Outlook.

Economic Outlook:

How will the Pakistan' economic policy-making and performance impact on corporate profitability over 2015-2019?

BMI provides our fully independent 5-year forecasts for Pakistan through end-2019 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Pakistan Country Risk Report features BMI's forecasts with supporting analysis for 2015 through to end-2019, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Index system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector obligations).
  • Global Assumptions - forecasts for each year to end-2019 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for Pakistan and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Pakistan, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in Pakistan over the next 5-years?

BMI's Pakistan country Risk Index evaluates the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the Pakistan Market - Political Strengths, Weaknesses, Opportunities and Threats facing Pakistan.
  • Political Stability and Risk Assessment - BMI's Risk Index assesses explicit short- and long-term risks to political stability; latest positioning and trends for Pakistan's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.
  • Long-Term Political Outlook BMI examines the structural risks to the stability of Pakistan’s political system and the dominant public policy issues likely to affect decision-makers, and outlines scenarios for how the state could evolve in the medium to long term.

Key Benefits

  • Benchmark Pakistan's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Operational Risk

What are the current operational risks and difficulties associated with doing business in Pakistan?

The Operational Risk section gives an evaluation of current risks and difficulties associated with operating in the market. It also provides a brief overview of the regional Operational Risk Index which benchmarks Pakistan against its neighbours.

Operational Risk Contents

The chapter provides a summary of the main threats in the country, within:

  • Labour Market Risk (Education; Availability of Labour; and Labour Costs)
  • Logistics Risk (Market Size and Utilities; Quality and Extent of the Transport Governance)
  • Trade and Investment Risk (Economic Openness; Government Intervention; and Legal Risks)
  • Crime and Security Risk (Crime; Terrorism; and Interstate Conflict risks).

The report also drills down in greater depth to address key issues in one of the following segments most critical to the market:

  • Transport network, economic openness, cost and availability of labour, crime risks, bureaucratic environment, market size and utilities, and interstate conflict.
  • Assess your company’s exposure to country specific operational and business risks, using BMI’s insight on the current dangers of operating in the market.
  • Evaluate Pakistan’s risk profile against its regional peers, helping you understand the market’s strengths and weaknesses in relation to other countries.

Key Sector Outlook*

Which industry sectors in Pakistan will grow fastest, and where are the major investment opportunities in the market?

BMI identifies investment opportunities in Pakistan's high growth industries including automotives, defence & security, food & drink, freight transport, infrastructure, oil & gas, pharmaceuticals & healthcare and telecommunications & IT.

Key Areas Covered:

  • Market Overview - Size and value of each industry, including recent sector developments and major industry key performance indicators (KPIs) that have impacted company performance.
  • 5-year Industry Forecasts - Forecasts for each year over 2015-2019, using BMI's proprietary industry modelling technique, which incorporates key domestic and international indicators - including economic growth, interest rates, exchange rate outlook, commodity prices and demographic trends - to provide fully integrated forecasts across and within each industry.
  • Demand- and Supply-Side Data/Forecasts - BMI's industry data covers both the output of each industry and the domestic demand, offering clear analysis of anticipated import/export trends, as well as capacity growth within each industry.

Key Benefits

  • Target strategic opportunities in high growth industries, which are benefiting from global mega trends, and thus offer strong investment and growth opportunities.
  • Compare the growth path of different industries to identify which are best placed to benefit from domestic and international economic prospects, and which have historically suffered from volatile growth trends - a key indicator of future risks.

*Not all Country Reports contain the Key Sector Outlook chapter. Please enquire above for more information.

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