Construction and infrastructural development have been cited as the primary drivers behind Pakistan’s emergence as a frontier market by a Bloomberg report.
The construction sector grew at 11.3 per cent through FY14-15, nearly double the 5.7pc target, according to State Bank of Pakistan data.
London-based chief economist at Renaissance Capital Ltd Charlie Robertson said of Pakistan: “It is the best, undiscovered investment opportunity in emerging or frontier markets,” adding, “What’s changed is the delivery of reforms and privatisation, an improved fiscal picture and good relations with the IMF.”
Nawaz’s government has boosted infrastructure expenditure by 27pc to Rs 1.5 trillion for fiscal year 2015-2016 (FY15-16), as interest rates are the lowest they have been in 42 years and the economy is expanding at its quickest since 2008.
Pakistan is a reform story like neighboring India’s, but only better, said Renaissance’s Robertson. Cement producers DG Khan Cement Co and Cherat Cement Co have announced plans to expand, while steelmakers Amreli Steels Ltd and Mughal Iron and Steel Industries Ltd are raising equity capital.
Bloomberg data shows the cement industry has rallied 57pc over the FY14-15 nearly thrice the benchmark target with Maple Leaf surging 161pc, Fauji Cement jumping 81pc, and DG Khan making gains of 62pc.
Chief Executive Officer UBL Fund Managers Ltd Mir Muhammad Ali said: “The construction industry is seeing a boom, and there is still juice left in the cement rally. Overall economic improvement has also helped.”
Pakistan’s $46 billion deal with China for the China-Pakistan Economic Corridor includes $28b in investments which are expected to have a trickle-down effect. A builder in Karachi Hassan Baskhi says: “Business has been very good, and there’s no doubt my work has tripled in five years. There’s huge demand from the middle class for affordable housing.”
The economy has shown resilience to environmental instability. The KSE Index among the world’s top 10 performers has grown 16pc over FY14-15, despite sectarian violence, bomb attacks, targeted killings and kidnappings.
Inflation has shown a downward trend over the past 12 months with the annual inflation for the just-concluded fiscal year resting at 4.53pc. Earlier this year, the International Monetary Fund said Pakistan had been making significant progress on targets in the $6.6bn loan programme. The IMF predicted growth of 4.5pc this year following a 4.1pc growth rate last year. Moody’s Investors Services, as well as Standard and Poor’s (S&P) upgraded Pakistan’s credit rating. The S&P attributed the improvement to diversification in income generation, the government’s efforts towards fiscal consolidation, improvement in external financing conditions and performance, and stronger capital inflows and remittances.
wow
Isn’t it possible that these stats are just manipulated? Those can be the personal views of just chief not what actual stats are. And besides is it a precisely credible source to declare Pakistan ahead of India in development? No doubt Pakistan is heading towards development but not more speedily than India. Still it is a good news.
the story isn't about the GDP growth which you are referring as development (i think) but about the reforms made by Pakistan to provide good investment opportunity…..and its not only Bloomberg which you are saying is not a credible source, manipulated, only chief views,blah blah blah…..but moody's, IMF, standard and poor, e.t.c also appreciated the steps taken by the government……under whose pressure is again a matter of debate but its good that we are heading in right direction
We should Not depend on IMF we have to do harsh reforms that will bring real change. Aslong corruption is in our society problems will still be the same. New political leaders willing to built Pakistan are needed.
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