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:

  • While the Pakistan government has had some success in reducing the number of terrorist attacks over the past 18 months, progress on addressing its root causes under the National Action Plan has been much less promising. Aside from the still-considerable potential for terrorist attacks, the lack of free speech and the growing use of blasphemy laws will make it difficult for the country to attract foreign investment.

  • We forecast the Pakistani economy to grow by 4.2% in FY2016/17, after an estimated growth rate of 4.7% in FY2015/16. Strong growth momentum and an expansionary budget will be supportive factors, but the rise in global oil prices will remove a major growth tailwind.

  • We are revising up our forecast for the Pakistani rupee, now expecting the SBP to maintain the current peg at roughly PKR104.7/USD, where it has been for most the year, rather than allow slight weakness. A combination of booming remittances and still-favourable terms of trade should keep dollar inflows strong, while increased financial account inflows should help to allow the central bank to build up reserves without the need to weaken the currency.

  • The 25bps cut in the benchmark interest rate in May will likely mark the last in the cycle, with near term inflation pressures rising. The next move will likely be a hike, which we expect to come in the latter part of 2016, but we do not expect a major hiking cycle as structural inflationary pressures will remain benign.

  • Pakistan's entry into the MSCI Emerging Markets Index will provide a significant boost to the country's portfolio account inflows over the coming years and highlights the progress made under the IMF-led reforms since 2013. However, continued reforms will be needed to ensure the country maintains its Emerging Market status and takes full advantage of the impending inflows.

Major Forecast Changes

  • We have made two changes to our Pakistan economic forecasts this quarter. Firstly, we are now pencilling in one rate hike by the SBP following their shock decision to cut the benchmark interest rate by 25bps in May. Indeed, it is likely that the SBP will look to reverse course as price pressures build over the coming months.

  • Secondly, we are now forecasting the currency to remain at the current level of PKR104.70/USD as the central bank has the willingness and ability to maintain the current peg over the coming fiscal year.

Key Risks

  • The risks to our real GDP growth forecast are tilted to the upside. The Pakistani economy faces a sweet spot of being very exposed to global energy prices yet relatively shielded from global growth weakness, and there are incipient signs that improved fiscal management and energy availability are driving a recovery in the crucial manufacturing sector.

Macroeconomic Forecasts (Pakistan 2014-2017)
Indicator 2014 2015e 2016f 2017f
National Sources/BMI
Real GDP growth, % y-o-y 4.0 4.2 4.7 4.2
Nominal GDP, USDbn 235.0 254.7 267.9 293.5
Consumer price inflation, % y-o-y, eop 8.2 3.2 5.5 6.0
Exchange rate PKR/USD, eop 100.52 104.73 104.70 106.79
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
Solid Growth Ahead
8
GDP By Expenditure Outlook
9
TABLE: GDP GROWTH FORECASTS
9
TABLE: PRIVATE CONSUMPTION FORECASTS
9
TABLE: GOVERNMENT CONSUMPTION FORECASTS
9
Fiscal Policy And Public Debt Outlook
10
Continued Progress Despite Privatisation Setbacks
10
TABLE: FIXED INVESTMENT FORECASTS
10
TABLE: NET EXPORTS FORECASTS
10
Structural Fiscal Position
11
TABLE: MAIN SOURCES OF REVENUE & EXPENDITURE
11
TABLE: FISCAL AND PUBLIC DEBT FORECASTS
11
External Trade And Investment Outlook
12
Entry Into MSCI EM Index A Boost To Economic Stability
12
Outlook On External Position
13
TABLE: MAIN EXPORT DESTINATIONS & IMPORT SOURCES
13
TABLE: MAIN EXPORT AND IMPORT PRODUCTS
13
TABLE: CAPITAL & FINANCIAL ACCOUNT BALANCE
14
TABLE: CURRENT ACCOUNT BALANCE
14
Monetary Policy
15
Next Move To Be A Hike
15
Monetary Policy Framework
15
Currency Forecast
16
PKR: Peg To Remain In Place
16
TABLE: MONETARY POLICY FORECASTS
16
TABLE: BMI CURRENCY FORECAST
17
Chapter 2: 10-Year Forecast
19
The Pakistan Economy To 2025
19
Significant Opportunities For Growth
19
TABLE: LONG-TERM MACROECONOMIC FORECASTS
19
Chapter 3: Political Outlook
23
SWOT Analysis
23
BMI Political Risk Index
23
Domestic Politics
24
Losing The Fight Against Islamic Fundamentalism
24
TABLE: POLITICAL OVERVIEW
24
Long-Term Political Outlook
25
Instability To Prevail, But Outright Collapse Unlikely
25
TABLE: SCENARIO MATRIX: EVOLUTION OF STATE
26
TABLE: SCENARIO MATRIX: CENTRIFUGAL VERSUS CENTRIPETAL FORCES
26
Chapter 4: Operational Risk
29
SWOT Analysis
29
Operational Risk Index
29
Operational Risk
30
TABLE: OPERATIONAL RISK
30
Market Size and Utilities
31
TABLE: ASIA - MARKET SIZE AND UTILITIES RISK
32
Labour Costs
37
TABLE: LABOUR REGULATIONS GOVERNING FLEXIBILITY OF WORKFORCE
38
Chapter 5:BMI Global Macro Outlook
41
Global Macro Outlook
41
Brexit Risk Casts A Long Shadow
41
TABLE: GLOBAL ASSUMPTIONS
41
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
42
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %
43
MACROECONOMIC FORECAST
45
MACROECONOMIC INDICATORS (PAKISTAN 2015-2025)
45

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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  • Delivery of the report in print and PDF
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