Business Monitor International


Pakistan Business Forecast Report

Published 23 April 2014

  • 49 pages
  • Instant access to your report online and PDF format through your account library
  • Includes 3 free updated quarterly reports
 
$1,195.00
Pakistan Business Forecast Report

Core Views:

  • Pakistan's economy continues to show signs of promise amid the ongoing drawbacks of an energy crisis, systematic terrorist activity, and a high fiscal deficit, driven in part by the costs associated with the former. Investment spending, which has underperformed headline real GDP growth for several years, declining to around 15% of GDP at present, looks likely to accelerate over the coming years. At present, Pakistan has the lowest investment rate in the whole of Asia, reflecting more than anything else the low national savings rate in the economy. Over the coming years, efforts undertaken by the government, with the assistance of the IMF, should help to boost the domestic savings rate, freeing up resources for investment.

  • Pakistan's parliament has approved a relatively business friendly budget for fiscal year 2014/15 (July-June), which should see the fiscal deficit cut to 4.9% of GDP from an estimated 5.8% in FY2013/14. A reduction of subsidies should help to keep spending in check, while a removal of tax breaks and efforts to penalise those not declaring income support tax revenues as it looks to meet terms set by the IMF and reduce its fiscal deficit to 4.0% of GDP by 2017.

  • The State Bank of Pakistan (SBP) held its policy rate at 10.0% at its May monetary policy meeting, and we expect it to maintain this course of action for the foreseeable future. The trend remains for lower consumer price inflation (CPI), with money supply growth continuing to decline and international reserves picking up, reducing the scope for monetary tightening. At the same time, economic activity is picking up pace and the growth outlook is positive, preventing the need to lower rates. With the real (inflation adjusted) policy rate at 1.7%, we do not see any impetus for change any time soon.

  • The surprise strengthening of the Pakistani rupee beginning in December 2013 seems to have come to an end in April. We maintain our view that this was a one-off move, and the...

Table of Contents

Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Ratings
7
Politics Article
8
Peace With The Pakistani Taliban-
8
TABLE: PAKISTAN POLITICAL OVERVIEW
8
Long-Term Political Outlook
10
Instability To Prevail, But Outright Collapse Unlikely
10
TABLE: SCENARIO MATRIX: EVOLUTION OF STATE
10
TABLE: SCENARIO MATRIX: CENTRIFUGAL VERSUS CENTRIPETAL FORCES
11
Chapter 2: Economic Outlook
13
SWOT Analysis
13
BMI Economic Risk Ratings
13
Economic Activity
14
Steady Upturn Still Fraught With Risk
14
TABLE: ECONOMIC ACTIVITY
14
Balance of Payments
17
Further Weakness PKR, Eye On Elections
17
TABLE: CURRENT ACCOUNT
17
Monetary Policy
19
SBP: Forceful Easing To Re-Ignite Inflation
19
TABLE: MONETARY POLICY
19
Fiscal Policy
21
Challenges Ahead To Sustain Fiscal Position
21
TABLE: FISCAL POLICY
21
Chapter 3: 10-Year Forecast
23
The Pakistani Economy To 2021
23
Sustained Underperformance; Q2 2013
23
TABLE: LONG-TERM MACROECONOMIC FORECASTS
23
Chapter 4: Business Environment
25
SWOT Analysis
25
BMI Business Environment Risk Ratings
25
Business Environment Outlook
26
TABLE: BMI BUSINESS AND OPERATION RISK RATINGS
26
TABLE: BMI LEGAL FRAMEWORK RATING
27
Infrastructure
28
TABLE: LABOUR FORCE QUALITY
29
Market Orientation
30
TABLE: ASIA - ANNUAL FDI INFLOWS
30
TABLE: TRADE AND INVESTMENT RATINGS
31
TABLE: TOP EXPORT DESTINATIONS, US$MN
32
Operational Risk
33
Chapter 5: Key Sectors
35
Autos
35
TABLE: AUTOS PRODUCTION, 2009-2016
36
Production
36
Food & Drink
39
TABLE: FOOD CONSUMPTION INDICATORS-HISTORICAL DATA & FORECASTS, 2010-2017
40
TABLE: HOT DRINKS VALUE/VOLUME SALES-HISTORICAL DATA & FORECASTS, 2010-2017
41
TABLE: MASS GROCERY RETAIL SALES-HISTORICAL DATA & FORECASTS, 2010-2017
43
Other Key Sectors
44
TABLE: DEFENCE AND SECURITY SECTOR KEY INDICATORS
44
TABLE: PHARMA SECTOR KEY INDICATORS
44
TABLE: INFRASTRUCTURE SECTOR KEY INDICATORS
44
TABLE: TELECOMS SECTOR KEY INDICATORS
45
TABLE: FREIGHT SECTOR KEY INDICATORS
45
Chapter 6: BMI Global Assumptions
47
Global Outlook
47
Growth May Be Turning The Corner
47
TABLE: GLOBAL ASSUMPTIONS
47
TABLE: DEVELOPED STATES, REAL GDP GROWTH FORECASTS
48
TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS (%)
48
TABLE: EMERGING MARKETS, REAL GDP GROWTH FORECASTS
49

The Pakistan Business Forecast Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Pakistan and is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of Pakistan's economic, political and financial prospects through end-2017, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

  • Forecast the pace and stability of Pakistan's economic and industry growth through end-2017.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the business environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise Pakistan's country risks against regional peers using BMI's country comparative Risk Rankings system.
  • Evaluate external threats to doing business in Pakistan, including currency volatility, the commodity price boom and protectionist policies.

The Pakistan Business Forecast Report by Business Monitor International (BMI) includes four major sections: Economic Outlook, Political Outlook, Business Environment and Key Sector Outlook.

Economic Outlook:

How will the Pakistan economic policy-making and performance impact on corporate profitability over 2013-2017?

BMI provides our fully independent 5-year forecasts for Pakistan through end-2017 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Pakistan Business Forecast Report features BMI's forecasts with supporting analysis for 2013 through to end-2017, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Rankings system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector exposure).
  • Global Assumptions - forecasts for each year to end-2017 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for Pakistan and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Pakistan, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in Pakistan over the next 5-years?

BMI's Pakistan country Risk Rankings evaluate the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the Pakistan Market - Political Strengths, Weaknesses, Opportunities and Threats facing Pakistan.
  • Political Stability and Risk Assessment - BMI's Risk Rankings assess explicit short- and long-term risks to political stability; latest ankings, rankings and trends for Pakistan's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.

Key Benefits

  • Benchmark Pakistan's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Business Environment

Business Environment Risk Rankings with SWOT Analysis - Business Environment Risk Rankings for Pakistan, benchmarked against rankings for regional neighbours.

Country Competitiveness - Competitiveness of Pakistan's business operating environment in supporting corporate growth and profitability, compared with regional neighbours.

Business Environment Contents

  • Domestic Environment - Transparency, cronyism and corruption; labour market flexibility; corporate tax burden; interest rate levels; sophistication of banking sector and stock market; levels of business confidence; infrastructure and IT.
  • Foreign Direct Investment - Analysis of foreign investment regime; foreign ownership laws; attractiveness of business environment to foreign investors.
  • Foreign Trade - Analysis of trading environment, government trade policy, liberalisation measures, tariffs and membership of trade areas.

Key Benefits

  • Assess your company's evolving exposure to country specific operational and business risks, using BMI's in-depth analysis of the legal and regulatory business environment.
  • Understand your market's comparative strengths and weaknesses in the key areas of commercial infrastructure and business institutions, using BMI's proprietary global Business Environment Risk Rankings.

Key Sector Outlook

Which industry sectors in Pakistan will grow fastest, and where are the major investment opportunities in the market?

BMI's identifies investment opportunities in Pakistan's high growth industries including automotives, defence & security, food & drink, freight transport, infrastructure, oil & gas, pharmaceuticals & healthcare and telecommunications & IT.

Key Areas Covered:

  • Market Overview - Size and value of each industry with developments over 2008-2012, covering major industry key performance indicators (KPIs) that have impacted company performance.
  • 5-year Industry Forecasts - Forecasts for each year over 2013-2017, using BMI's proprietary industry modeling technique, which incorporates all key domestic and international indicators - including economic growth, interest rates, exchange rate outlook, commodity prices and demographic trends - to provide fully integrated forecasts across, and within, each industry.
  • Demand- and Supply-Side Data/Forecasts - BMI's industry data covers both the output of each industry and the domestic demand, offering clear analysis of anticipated import/export trends, as well as capacity growth within each industry.

Key Benefits

  • Target strategic opportunities in high growth industries, which are benefiting from global mega trends, and thus offer strong investment and growth opportunities.
  • Compare the growth path of different industries to identify which are best placed to benefit from domestic and international economic prospects, and which have historically suffered from volatile growth trends - a key indicator of future risks.

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Testimonials

The sections that I find most interesting and useful are the macroeconomic data and forecasts for the country, top export destinations and economic activity. The indicators/analysis of these areas helps us orient our thinking, our assumptions and, consequently, our decisions in the commercial area.

Country Manager, DHL Express