The State Bank’s annual report makes special mention of the issues of governance and sends out a red alert to the government to fix the economy before Pakistan faces an economic collapse.

Raja Muhammad Sakhi I conducted a research on Attaabad Lake, to study the  “impacts of Attaabad Lake on the Socio-Economic conditions of district Hunza-Nagar”. This article shows how the formation of Attaabad Lake has affected the social and economic conditions of district Hunza-Nagar. A set of 80 respondents were selected randomly from the Lower, Central [...]

Because being middle class is too mainstream and PakMediaBlog wants to improve the purchasing power of its readers (which allows us to raise our advertising rates without feeling too bad), the PakMediaBlog staff has graciously compiled a list of reasons investors the world over are pouring their retained earnings into Brazilian companies both public and [...]

Why 2012 Investors Love Brazil is a post from: PakMediaBlog All Rights Reserved.

Dismantling barriers to ease trade between Pakistan and India may be beneficial for both countries and political commitment at both ends would give credence to the term Most Favoured Nation.

No wiggle room left:  State Bank of Pakistan estimates for major FY12 macroeconomic targets are lower than GoP’s budget projections, though it has highlighted avenues of upside, specifically from likelihood of weaker oil prices and continuation of strong remittances. While highlighting the need for taking key fiscal measures – broadening of tax base, improving collection machinery, removing subsidies and restructuring PSEs – State Bank of Pakistan highlights that:

“In the current state of Pakistan’s economy, there is no wiggle room left.”

We believe the statement sums it all up.

State of Pakistan’s estimates underperformance on major economic targets: State Bank of Pakistan‘s expects FY12 growth to range between 3.0-4.0% (budget target: 4.2%), while inflation shall range between 11.5-12.5% (budget target: 12%). SBP expects trade deficit to range between USD15.2 – 16.4bn (budget target: USD12.2), which would push FY12 CAD to 1.5% – 2.5% of GDP (budget target: 0.6%). Fiscal deficit is expected to exceed target and range between 5.5% – 6.5% of GDP.

External sector joins an otherwise unchanged core issues list: 1) Fiscal indiscipline, 2) resulting slippage effects on domestic debt and crowding out of pvt sector, and 3) acute power shortage, being the other three.

Bottom line: While we do not differ with State Bank of Pakistan’s stance that Pakistan’s FY12 FX debt payment risk is not large, our biggest concern emanate from Jun-12 FX reserves balance and estimated debt servicing of USD5.0bn in FY13, where likelihood of FX inflows remain minimal after the suspension of the IMF program. With fiscal side out of order, high inflationary risks, and bleak growth outlook due to precarious energy situation and private investment, we believe that heightened macroeconomic risks warrant attention.

Elixir Securities

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As per details released by the SBP, balance of payments deficit has touched US$1.7bn in 5MFY12, reaching close to our full year projection of US$1.8bn.

This is primarily led by 3.6x jump in CAD to US$2.1bn, whereas financial account surplus contracted to US$169mn on lower than expected sovereign flows.

While current account deficit reading came in higher MoM in Nov-11 (US$478mn vs. US$287mn in Oct-11), currency has depreciated 4.2% since Nov, where we believe the forex market is already anticipating a potential lack of donor support in the coming months.

While our FY12E base case currency devaluation is estimated at 3.5%, we keep a close eye on (1) the detailed IMF report/Letter of Comfort and (2) Pak-US relations, that could drive prospects of committed sovereign flows picking up pace.

KASB Securities and Economics Research

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After paying attention to trends, common sense dictates that the president must bring prosperity to rich and poor like by freeing up private enterprise and reducing the size of government spending. On the advice of his Chief Economist, Obama has declared that capitalism has never worked. How convenient. He wants to preserve the middle class [...]

Why Obama’s Should Fire His Chief Economist is a post from: PakMediaBlog All Rights Reserved.

Remittance growth slows down: While 5MFY12 remittances at USD5.2bn show a stellar growth of 18%, Nov-11 remittance was down 0.2% YoY for Pakistan. Two of the first five months of current fiscal year now show a YoY decline in remittances. We expect FY12 remittance to grow by 6% to USD11.9bn, against an average annual growth of 20% during FY09-11.

Key concern remains continuation of inflow growth from Saudi Arabia and UAE: Saudi Arabia and UAE, combined, comprised 47% of remittance inflows in FY11 and have contributed 60% to remittance growth during the past three years. Inflows from UAE have started slowing down, with 5MFY12 remittance growth of 12% against an average of 24% during FY10-11. While remittance inflows from Saudi Arabia during 5MFY12 are up 46% YoY, ongoing localization drive due to rising unemployment levels, is likely to hinder remittance growth going forward.

Slowdown in remittance growth poses another risk to external account: Slow down in remittances is another risk faced by external account, as strong remittance inflows were the key contributor to improvement in the external account during FY09-11. With FY12 remittance expected to grow by 6% to USD11.9bn, we now expect FY12 BoP to post a deficit of USD2.0bn and expect reserves to fall to USD15bn by Jun-12.

Elixir Securities

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To ensure our readers are ahead and informed, we’ve compiled a list of informative articles for easy reading for a prepared start on Monday morning: 1. As more American’s opt for a cheaper educational experience abroad, they also do the unexpected by staying there … full article on the American Brain Drain can be found [...]

Top 5 Sunday Articles is a post from: PakMediaBlog All Rights Reserved.