WEBDESK: Perceptions matter! Be it stock and real estate markets or a country from the perspective of global lens. The decisions made by countries, multilateral agencies or multinational corporations are influenced by international agencies ratings, view of top research houses and investment banks, and the news in the media around the world.
Long distance research is never accurate and is based on what is being fed by various corners but the calls or reports by reputed agencies, media and research houses have ample weight to influence decision making by external partners.
Hence, negative perception has consistently kept Pakistan underrated by various sources and things got worse over the last two decades. The security threat used to overshadow the economic potential the country has.
Headlines featuring Pakistan mostly revolved around Taliban, Afghanistan, OBL, and the list goes on. The investors, creditors and exports costumers used to shy away from building interest in Pakistan. Even, international cricket had to be moved away from the country.
The environment exacerbated in the previous government as the former President and co-chairman of the ruling party was widely known as Mr. 10 percent for his scores in corruption. The situation could not improve in the early days of PML N government when charismatic leader, Imran Khan, led a four month long sit-in in the heart of Islamabad.
During this time all the headlines were about the rhetoric of Imran and his newly adopted “brother”, Tahirul Qadri, who were feeding the news hungry local and foreign media, thus perpetuating the feeling of gloom and doom.
As a result, the Chinese President postponed his visit to Pakistan and the IMF withheld disbursement of the due tranche among other outcomes. But the gloomy picture portrayed by many is gradually being coloured in brighter hues. During the last couple of months, virtually all the news featuring Pakistan has been about its untapped economic potential, with security issues having taken a backseat.
“Pakistan is a reform story like Indias but only better” said by London-based chief economist at Renaissance Capital Ltd Charlie Robertson. He emphasized that the construction and infrastructure development in Pakistan is booming.
Financial Times recently ran a headline that “Pakistan enjoys run of good news”. While Khaleej times stated that Pakistan is warming up and after stabilization the economy Pakistan eyes to boost growth.
The Wall Street journal is spreading similar sentiments by emphasizing that Pakistan economy has improved in recent years as Pakistans risk is falling behind further.
The tone applied by Morgan Stanley is also full of positives: “Pakistan is among those nine countries in Asia that will add another China in the next 35 years” stated its Chief Investment Strategist David M Darst. According to him Pakistans rise is just a matter of time as it has to reap demographics dividends with average age of 22 years. Pakistan is likely to be upgraded to MSCI emerging market from existing frontier market index.
On the same note, Goldman Sachs Jim ONeill forecasts that Pakistan would be worlds 18th largest economy by 2050. The rating agencies have upgraded Pakistans credit rating; S&P raised credit rating to positive from stable but affirmed its B-rating. Similarly, Moodys upgraded Pakistans dollar bonds rating one notch from stable to positive.
S&P attributed the improvement to diversification in income generation, the governments efforts towards fiscal consolidation, improvement in external financing conditions and performance, and stronger capital inflows and remittances.
What has changed in the last few months that triggered all the positive sentiments with good vibes coming from every corner? The most apparent reason is the China-Pakistan Economic Corridor under which China committed to invest around $45 billion in Pakistan in the coming years. The geopolitical shift is brightening the countrys perception. The credit also goes to the Finance Minister who is diligently working on restoring countrys relation with IMF and other multilateral donors. The new army chief has also played his role in not only improving the security situation but also strengthening the relationship with both China and Russia while also keeping the US content.
Lets hope this better outlook is not jinxed by our external and internal enemies, and the decision makers do not make foolhardy and rash measures to spoil the party.
Source: BR research