Country Report Pakistan March 2009

Summary

The recent terrorist attacks in the Indian city of Mumbai and the Pakistani city of Lahore, as well as the government's peace deal in Swat, will ensure that there is a renewed international focus on Pakistan's ability to rein in terrorism.
Political stability is set to worsen in the short term and is unlikely to improve greatly in 2009-10 as a whole. Tensions between the government and the security forces could rise.
Pakistan's acceptance of a US$7.6bn emergency financing package from the IMF means that it will lose considerable autonomy in setting economic policy.
Economic policy will remain focused on crisis management in 2009. A sharp tightening of fiscal and monetary policy is the central tenet of the IMF's conditions for its assistance.
The government's focus on reining in the fiscal deficit means that it will have to cut back on expenditure. Nevertheless, the Economist Intelligence Unit expects the deficit to reach 6.5% of GDP in fiscal year 2008/09 (July-June).
Real GDP growth (expenditure measure) is forecast to slow to just 1% in 2008/09, from 6% in 2007/08. High inflation will depress real wages and thus consumer spending. Growth will increase to 2.3% in 2009/10.

On February 25th the Supreme Court ruled that the leader of the Pakistan Muslim League (Nawaz), Nawaz Sharif, and his brother, Shahbaz, the chief minister of Punjab, were ineligible to hold public office.
On February 15th the government agreed a peace deal with Islamist militants in Swat, part of the North West Frontier Province. The agreement sanctioned the imposition of Islamic law in the area.
On March 3rd armed militants attacked Sri Lanka's cricket team in Lahore, killing six policemen and a bus driver.
The Pakistan People's Party, which leads the coalition government, was the main winner in the recent election to the Senate (the upper house of parliament), raising its tally of seats to 28, from 11 previously.
In late February the Asian Development Bank mooted increasing its assistance to Pakistan in its 2009-13 Country Partnership Strategy (CPS) to US$9bn, double its level of assistance in the current CPS.
Output from the large-scale industrial sector declined by 4% year on year in the first half of 2007/08.
Remittances from Pakistanis working overseas rose by 18.7% year on year, to US$3.6bn, in the first six months of 2008/09.

Source: Country Report

This report covers the following industry codes:
SIC Code: 53
NAICS Code: 44