The window of opportunity

Standard Chartered Bank expects Pakistan's GDP growth to tally 4.4 percent in FY16. This forecast is lower than the expectations of the government of Pakistan, the IMF as well as Citibank which expects five percent growth in this fiscal.

In an interaction with media, Chief Economist for SCB, Marios Marathetis contended -"Asia, Africa and the Middle East are the growth engines for the future" and that as China invests in infrastructure, Pakistan can enjoy a significant rise in its national output. However, the key limiting factor appears to be supply-side constraints. Senior Economist for SCB Pakistan, Bilal Khan concedes that "the pace of fiscal reforms in the country is slower than hoped for".

International markets have gone through a crisis of confidence over a slowdown in the Chinese economy. Yet, Mr. Marathetis contends that the impression that emerging economies are in recession, could not be further from the truth. He pointed out that while global markets react to a slowdown in China, that country's GDP growth will likely tally 6.9 percent, this year. On the other hand, the US economy which is being touted as a global growth driver shall grow by a meager 1.6 percent in the same period.

In recent times, interactions with other senior bankers and international business delegates underscore renewed global interest in Pakistan. Although FDI numbers belie any talk of a positive change; the coming of international investors, financiers and businesses suggests the money will follow.

In recent interactions, BR Research notes two prominent themes. Firstly, the implementation of CPEC projects is a weather wane for other aspiring investors and businesses. Secondly, the government's ability to curtail fiscal slippages is a must for sustainable stability and growth. While progress on the former is being driven by Chinese counterparts; the jury is still out on the government's achievements in the latter realm.

SCB expects oil prices to persist at low levels in the near future, with a price outlook of $75 per barrel for the fourth quarter of CY16. The bank expects Dollar-Rupee parity to end the year at Rs107. Clearly, the stars have aligned for Pakistan. Exogenous factors such as oil prices have played havoc with the country's external accounts in the past. This time around, it seems those very factors have provided a window of opportunity.