PAKISTAN ECONOMIC OUTLOOK FOR 2013----By Shan Saeed
Pakistan economy will continue to remain in un-chattered waters due to political uncertainty, militancy, growing fear of unpredictable policies of the PPP government.
GDP will stand at 3.2% by June 30, 2013.
Fiscal deficit will remain 6.5% of GDP.
Inflation will hover around 10% .
Foreign exchange reserves will be $14 billion,
Remittance will kiss $ 13 billion
Due to global upsurge in demand of commodities, Pakistan being the agriculture based economy will benefit from the international commodities boom. SUGAR, RICE, COTTON , WHEAT will benefit from rise in prices
Due to election year,political and economic turmoil will keep the Pak Rs under pressure against USD. However, if Pk Rs does appreciate against USD it would be due to QE4 launched by the FED to keep the USD lower globally. Pak RS will stand at 98.5 against USD on June 30, 2013
PAK RUPEES OUTLOOK FOR 2013
There are 7 variable making an impact on Pak Rupees in 2013
This year heralds an economic change whereby government will hold elections under the supervision of army and independent Election Commission of Pakistan. Most parties will get their funding from abroad and lobbies working locally. This election will be the bloodiest elections in the history of Pakistan. So most of the spending will happen in Pak Rupees and supply of PKR will be more in the market.DEMAND SIDE FOR PAK RUPEES
This economy is going through lot of hiccups and instability, fear and uncertainty, this will make entrepreneurs and people think to keep their savings in DOLLAR OR Canadian Dollar OR Gold. Political instability will have NEGATIVE impact on Pak rupees thus keeping money in FOREIGN CURRENCY attractive and rationale. DEMAND SIDE FOR FOREIGN CURRENCY
The global economy is getting messier as Europe is deep in recession and US is struggling to come to terms with fiscal cliff i.e. raising taxes and reducing spending and deliberation of Debt ceiling continues. Many Pakistanis are sending their saving back home to avoid losing their funds in European and American banks. Swiss secrecy laws are outdated and authorities are sharing data with various countries as per their jurisdiction requirement. Most Pakistani will be routing their funds back to Pakistan for other destinations including Dubai, Kuala Lumpur, Singapore, Hong Kong, London and Luxembourg. DEMAND SIDE FOR PAK RUPEES
D.COALITION SUPPORT FUND
Pakistan is expected to get some inflows from the War of Terror support money. This will increase the Dollar inflow in the country. $700 million^ was expected. DEMAND SIDE FOR PAK RUPEES
E.IMF DEBT PAYMENT
Pakistan need to make debt payment during the first quarter of 2013. This will put little pressure on PAK rupees since Dollar outflow will happen to meet the debt payment requirement. More than $800 million^ to be paid. DEMAND SIDE FOR FOREIGN CURRENCY
Pakistan imports huge quantity of oil to meet her domestic requirement. OIL payment needs to be made to keep the oil supplies running to meet the domestic demand. DEMAND SIDE FOR FOREIGN CURRENCY
G.REGIONS IMPACT ON THE PAKISTAN EXPORT
Since our neighboring country India is witnessing a slower growth, she will continue to keep her currency and interest rates low in line with international STRUCTURED DEPRECIATION of currencies. Many countries globally are keeping low interest rates to boost domestic economy, increase exports, keep the growth momentum going in order to bring structural changes to move on the growth trajectory with sustainable economic returns for their people. DEMAND SIDE FOR PAK RUPEES.
In view of the above 7 variables, Pak Rupees will remain choppy in line with the strategies adopted by various countries of STRUCTURED DEPRECIATION to boost exports in the short run to compete with the region. SBP will supply more Dollars to keep the Pak Rupees away from a free fall. There could be capital controls imposed if the economy deteriorates if election results are not fair. Strikes, social unrest and anarchy situation cant be ruled out. CAUTION IS THE WORD FOR INVESTORS