Bloomberg on Pakistan’s economic revival, construction boom
Bloomerberg’ Faseeh Mangi has published a report, titled: In the ‘Best Hidden’ Frontier Market, a Boom Signals a Pakistan Revival: Construction is leading the way in a big expansion. This is the story of an amazing turnaround of once-an-ailing economy.
This is in line with the trends we predicted when this government took over in June 2013. Similar stories from other credible publications like NYT, WSJ, The Economist and The Washington Post have been published on this blog.
In our quest for credible, data-based information on Pakistan, we are reproducing the story below:
Metro Bus Floyover connecting Faizabad to Peshawar Morr in Islamabad
The Sufi shrine that dates to the 8th century in Karachi’s posh Clifton neighborhood has served as the area’s defining landmark for decades. Not anymore.
Dwarfing the monument today is a gleaming 62-story highrise, coming up right next door. The building is one of at least half a dozen projects springing up in the locality as developers from Dubai’s Emaar Properties PJSC to local tycoons change the face of Pakistan’s financial hub and the skylines of many smaller towns.
The construction boom also marks the nation’s emergence as a frontier market after Prime Minister Nawaz Sharif averted a balance-of-payments crisis with help from the International Monetary Fund and resumed selling stakes in state companies. He is boosting infrastructure spending as the $232 billion economy expands at the fastest pace since 2008 amid the cheapest borrowing costs in 42 years.
“It is the best, undiscovered investment opportunity in emerging or frontier markets,” said Charlie Robertson, London-based chief economist at Renaissance Capital Ltd. “What’s changed is the delivery of reforms — privatization, an improved fiscal picture and good relations with the IMF.”
Shrugging off sectarian violence, bombings, killings and kidnappings, the benchmark KSE100 stock index has advanced about 16 percent in the past 12 months, featuring among the world’s top 10 performers.
D.G. Khan Cement Co., controlled by billionaire Mian Muhammad Mansha, and Cherat Cement Co. have announced expansion plans, while steelmakers are selling shares.
Amreli Steels Ltd., the nation’s biggest maker of steel bars used in construction, is planning a share sale to help double capacity. Mughal Iron & Steel Industries Ltd. completed an initial public offering in April.
Pakistan’s cement industry has rallied 57 percent in the past year, more than triple the gains by the benchmark, according to data compiled by Bloomberg. D.G. Khan Cement, the third-largest maker of the construction material, has jumped 62 percent and Maple Leaf Cement Factory Ltd. has surged 161 percent and Fauji Cement Co. Ltd. has gained 81 percent.
“The construction industry is seeing a boom, and there is still juice left in the cement rally,” said Mir Muhammad Ali, chief executive officer of UBL Fund Managers Ltd. that handles about 56 billion rupees ($550 million) in stocks and bonds in Karachi. “Overall economic improvement has also helped.”
Sharif, who took power in May 2013, boosted infrastructure spending by 27 percent to 1.5 trillion rupees for the year starting Wednesday, July 1.
Pakistan is making “significant progress” in meeting targets under its $6.6 billion loan program, the International Monetary Fund said in May. The lender predicted a 4.5 percent growth in the economy in the year starting July 1, following a 4.1 percent expansion last fiscal year.
Easing prices are also set to buoy consumer spending. Inflation in South Asia’s second-largest economy slowed each month this year through April as transport and food prices fell, prompting the central bank to cut the benchmark interest rate in May to the lowest level in 42 years.
Moody’s Investors Service upgraded Pakistan’s sovereign credit ratings for the first time since 2008 in June but said stalling of the ongoing IMF program or an unstable political environment would be credit negative.
Also see a few other related indices:
91% Pakistanis have access to drinking water: Unicef/WHO
Pakistan 65th most vulnerable country to face climate change
High temp, low air pressure, high humidity, absent wind behind heatwave deaths
From 3rd worst to 5th: Pakistan ranking in terror deaths improves
Good news: Terrorist attacks decreased in Pakistan in 2014
Pakistan ranks #3 in global terrorism index 2014
Pakistan 3rd biggest terrorist risk spot in the world
Pakistan is world’s 9th least peaceful country: 2014 GPI
Pakistan 10th most fragile country
Pakistan 3rd least safe country in Global Competitiveness Report 2014-15
Pakistan #106 in Good Country Index
Western route of CPEC under construction: Two-lane 650km Gwadar-Sorab road providing connectivity up to Quetta, Qila Saifullah, Zhob in Balochistan & D I Khan in KPK.
Violence, mostly from Taliban-linked insurgents who want to impose their version of Islamic law, has claimed more than 60,000 lives since 2001. Sharif survived a scare last August when opposition parties demanded his resignation over accusations he rigged the elections in 2013. He denied the allegation but agreed to a probe by a tribunal.
Standing by Pakistan is the nation’s long-time strategic ally. In April, Asia’s biggest economy, China, signed deals for $28 billion of investments in Pakistan as part of a planned $45 billion economic corridor that includes power plants and dams.
The development in cities and smaller towns is trickling down and is good news for smaller contractors as well.
“Business has been very good, and there’s no doubt my work has tripled in five years,” said Mohammed Hassan Bakshi, 43, a builder in Karachi. “There’s huge demand from the middle class for affordable housing.”
Builders in Pakistan are seeking technology from China to help cut down construction and project execution times to as little as six months from as long as five years, he said.
The nation’s construction sector grew by 11.3 percent in the year through June 2014, almost double the 5.7 percent target, according to central bank data. Pakistan is a reform story like neighboring India’s, but only better, said Renaissance’s Robertson.
“All of this is a big change on 2013,” he said. “Credit rating agencies are beginning to recognize this.”
See also: Everything else we reported on Pakistan and its future (links below)
Next year, Pakistan may upgrade to emerging-market status: WSJ
You can now import planes & spares tax-free
Naya Pakistan: Travel from Pindi to Islamabad in 20¢ in wifi-ed AC bus
Rs 165B Orange Line Metro Train approved for Lahore
Green Line train from Islamabad to Karachi with free wifi starts today
Rs15B Green Line metro bus project for Karachi announced
No ordinary day as international cricket returns to Pakistan
Pakistan is the world’s fastest-growing Muslim economy: The Economist
Pakistan is enjoying a rare period of optimism: The Economist
China-Pakistan Economic Corridor to be a game changer
Good! Pakistan no more among the most corrupt in the world
Pakistan 15th most powerful military in the world
JF-17 Thunder strikes first deal at Le Bourget 2015
Pakistan #1 in positive perception change as an investment destination
5 Pakistani banks: ABL, UBL, HBL, MCB, NBP get Stable rating
Moody’s upgrades Pakistan’s bond rating from stable to positive
Moody’s revises Pakistan rating from negative to stable
When China fails Pakistan delivers: Saves Fifa World Cup at the last minute
Pakistan #4 best performing global stock market
Total fertility rate falling in most world; Africa & Pakistan rising
Pakistan world’s least expensive country: WB
As S Asia ups economic game, Pakistan risks falling behind: WSJ. The question is why?
Pakistani passport ranks at 71, with 46 visa-free countries
Pakistan at rock bottom in Human Capital Index 2015
Number of nuclear warheads down worldwide, up in S Asia
Pakistan #42 on world misery index
Pakistan ranks poorly on Global Innovation Index 2014
In Pakistan, electricity shortages & crime are two biggest problems
Pakistan, Iran most-negatively viewed countries
South Asia world’s most corrupt region: TI
Which country has the worst air pollution? | Hint: Pakistan
Pakistanis to have shorter lives as the world will live longer
Sorry state of medical practice in Pakistan
Pakistan’s two value crimes no one talks about
Do not miss our Understanding Pakistan Series
Wali on Pakistan of future
Pakistani culture through 6-D Model
Native languages in Pakistan
How future oriented are we?
How we messed up Pakistan: A series by Wali