Economy shows signs of slowdown

Islamabad: Pakistan's equity markets open on Monday amid much apprehension over the country's emerging future. The success by the opposition parties in taking a clear lead over parties loyal to president Pervez Musharraf, has created an unprecedented situation for Pakistan.

The president is known to be partisan in this emerging situation, taking a political line which is clearly opposed to the positions taken by Pakistan's newly elected victors. The question for stakeholders tied to the economy and the markets is clearly a profound one.

The challenge for the markets comes as Pakistan's economy shows visible signs of heading in to a slowdown mode. The effect of the global oil price situation is being felt by a range of stakeholders in the economy, particularly the industrial and corporate sectors.

For the moment, some sectors continue to perform reasonably well. These include banking and finance, as well as energy related companies dealing with oil and gas related businesses. Banks have performed robustly in the past five years, driven by mounting profits and a fast growing demand for their products.

The market trend will be determined by the political mood in the country and the resultant effect of that mood for the economy. On the face of it, a new government is likely to see itself surrounded by friction ridden relations with president Pervez Musharraf.

In spite of the defeat for the Pakistan Muslim League - Quaid-e-Azam (PML-Q), the clearest pro Musharraf party, the Pakistani president is determined to stay in power. Under the Pakistani constitution, there is no restriction on him for taking this position. Musharraf won for himself a five year tenure as president in October.

But his position has weakened in view of the political onslaught he faces from opposition parties which include senior leaders who have promised to oversee his exit from Pakistan's power scene.

Such shenanigans surrounding Pakistan's high political landscape will not help the outlook for the stock market, which needs consistency to settle down.

- The writer is a journalist based in Pakistan.