Country Report Pakistan September 2009

Outlook for 2009-10

• National security will remain the most pressing issue on the domestic political agenda, but there is little chance that the battle against Islamist militancy will be decisively won in the medium term.
• It is likely that the death of Baitullah Mehsud, a militant Islamist leader, will have only a limited impact in the long term on Pakistan's battle against terrorism.
• The US's policy on Pakistan and Afghanistan encompasses both military strikes on suspected Islamist militants and development assistance, but will also seek co-operation and ???accountability??? from Pakistan.
• Pakistan's acceptance of emergency financing from the IMF means that it will lose a considerable degree of autonomy in the area of economic policy.
• The government made progress in reducing its deficit in fiscal year 2008/09 (July-June), but it plans to increase spending in 2009/10. The Economist Intelligence Unit thus forecasts the budget deficit at 5.1% of GDP in 2009/10.
• The State Bank of Pakistan (SBP, the central bank) expects to see a steeper fall in inflation in the coming months, and as a result will shift its policy bias away from fighting inflation and towards supporting economic growth.
• We forecast that real GDP will expand by only 2.7% in 2009/10, compared with growth of 3.7% in 2008/09.

Monthly review

• Tehrik-i-Taliban Pakistan (the local offshoot of the militant fundamentalist Taliban movement) announced in August that Hakimullah Mehsud would be its new leader.
• The main opposition party, the Pakistan Muslim League (Nawaz), is pressing for the former president, Pervez Musharraf, to be tried for treason based on his imposition of emergency rule in November 2007.
• On August 30th the government approved an order that provides limited autonomy to the Northern Areas, which are now called Gilgit-Baltistan.
• On August 12th the government announced a new five-year policy for the textile sector. The policy aims to boost annual textile exports to US$25bn by? 2014.
• In August the finance minister, Shaukat Tarin, launched the Pakistan Remittance Initiative in conjunction with the SBP. The initiative seeks to facilitate the continued rapid growth of remittance inflows.
• Pakistan's import bill fell to US$2.6bn in July, from US$3.5bn a year earlier. Total export receipts stood at US$1.5bn, down from US$1.9bn in July 2008.

Source: Country Report

This report covers the following industry codes:
SIC Code: 37;1
NAICS Code: 336;11

• Highlights
• Outlook for 2009-10: Domestic politics
• Outlook for 2009-10: In focus
• Outlook for 2009-10: International relations
• Outlook for 2009-10: Policy trends
• Outlook for 2009-10: Fiscal policy
• Outlook for 2009-10: Monetary policy
• Outlook for 2009-10: International assumptions
• Outlook for 2009-10: Economic growth
• Outlook for 2009-10: Inflation
• Outlook for 2009-10: Exchange rates
• Outlook for 2009-10: External sector
• Outlook for 2009-10: Forecast summary
• The political scene: Tehrik-i-Taliban Pakistan chooses a new leader
• The political scene: Violence continues in the north-west and elsewhere
• The political scene: The PML (N) wants to try Mr Musharraf for treason
• The political scene: The Northern Areas get partial autonomy and a new name
• Economic policy: A new textile policy is announced
• Economic policy: The government launches a new remittance programme
• Economic policy: The authorities try to address a sugar crisis
• Economic performance: External assistance continues to flow in
• Economic performance: The current-account deficit narrows further
• Economic performance: Water shortages could hamper agricultural production
• Data and charts: Annual data and forecast
• Data and charts: Quarterly data
• Data and charts: Monthly data
• Data and charts: Annual trends charts
• Data and charts: Monthly trends charts
• Data and charts: Comparative economic indicators
• Basic data
• Political structure