Shares around the globe fell on Monday, particularly in Asia, but this was in sharp contrast to the stock market in Pakistan which witnessed a surge for the eighth consecutive day boosting investor confidence and the morale of economic institutions.
The KSE-100 index soared amidst a positive quarterly review by the IMF that macroeconomic conditions are improving. The monetary institution has said that Pakistan’s fiscal deficits are declining and the government’s policies have started to bear fruit.
Pakistan foreign reserves also are expected to increase as the IMF has announced to release the first tranche of the $6 billion financial assistance programme. The State Bank raised eyebrows when it stated that foreign currency reserves have increased by $443 million within a week. The central bank was purchasing dollars to meet the IMF’s requirement keeping in view the liquidity in the market.
The IMF said that Pakistan’s economic outlook remained unchanged since the programme’s approval in April, and expressed optimism that inflation would decelerate in the next fiscal year. However, it said that domestic and international risks remain and structural economic challenges persist.
Investor confidence has also been boosted now that the global equity firm MSCI has retained Pakistan in the Emerging Marketing Index in line with market expectations. These positive developments are a pat on the back for the government’s team that signs are indicating economic stability is gradually taking hold on the macroeconomic front.
The IMF has also conceded that net reserves are increasing and revenue collections are growing on the back of tax reforms and policy changes despite the compression on import-related taxes. More importantly, measures to strengthen social safety net are being implemented and developing spending is being prioritized.
The government would also be relieved that there is a global economic downturn exacerbated by the US-China trade war. Even China will witness its slowest growth rate since the last 27 years. The country is rattled by pro-democracy protests in Hong Kong now in its 24th consecutive week which has taken a toll on global stock markets.
These nerves have spread across Asia and parts of Europe, as the Euro bond and London shares also fell. Wall Street suffered as investors were seen running for assets perceived to be safe havens and away from riskier currencies. Pakistan should take a sigh of relief that it was not affected by this global upheaval.
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