Business | Opinion
Economic pitfalls will dim rosy outlook
Pakistan's main stock market, the Karachi stock exchange (KSE), has chosen to ignore for now the warning of an imminent economic emergency from Ishaq Dar, the new finance minister.
- By Farhan Bokhari, Special to Gulf News
- Published: 00:14 April 13, 2008
Islamabad: Pakistan's main stock market, the Karachi stock exchange (KSE), has chosen to ignore for now the warning of an imminent economic emergency from Ishaq Dar, the new finance minister.
The mood surrounding the KSE is largely driven by the momentum which has built up in the past five years, as the Pakistani economy went through a high growth cycle.
However, investors in the stock market cannot remain complacent forever. The effect of an overall slowdown must eventually catch up with the KSE's broad sentiment.
On the one hand, many investors are eager to ride the bandwagon which comes from a sustained growth over the past few years. On the other, many equity investors probably feel optimistic over some of the key sectors which have attracted a lot more investments than others. These include areas such as oil and gas, banking and cement.
But the current shenanigans surrounding Pakistani politics do not provide comfort for the long term outlook. Already, many analysts are warning of the danger of infighting between the two main partners in the ruling coalition.
The rising international trade deficit, falling economic growth rate and the sharply rising budget deficit have already raised concerns over the future of Pakistan's economy.
With inflation in March being the highest in almost 13 years, further expenditure cutting measures would only add to the economic challenges faced by businesses and industries. This is not good news for the stock market.
- The writer is a journalist based in Pakistan.
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