Five reasons the (Pakistani) economy won't improve soon

[Nitin Goyal]

only 1 problem dear bad governance thats it

that is a universal problem... but this is only sympton.. the basic problem is because of weak instituitions. You also should blame PA to create a atmosphere of unaccountability.

 

[sputnik]

there is a misconception in almost whole of South east asia tht there currencies are devalued against dollar by so and so percent. The reality is the US dollar is getting strong therefore, even if u are doing same just like before, ur currency still not doing good.

The Leader of 2012 is the US dollar. currently traders across the spectrum are following is sell the gold and buy the Dollar.

 

[karan.1970]

there is a misconception in almost whole of South east asia tht there currencies are devalued against dollar by so and so percent. The reality is the US dollar is getting strong therefore, even if u are doing same just like before, ur currency still not doing good.

The Leader of 2012 is the US dollar. currently traders across the spectrum are following is sell the gold and buy the Dollar.

But isnt Aryan_B going to collapse the US dollar easily this year????

http://www.defence.pk/forums/world-affairs/149036-us-dollar-will-easy-collapse.html

 

[deckingraj]

Is that supposed to be good for Pakistan... or good for India?

Should you be asking such a naive question??? Who will benefit more should there are good relations between India and Pakistan?? Even a kindergarden kid can answer that...if you have doubts i am more than happy to discuss with you....Though strategically it will be bad news for China...

Many countries have grown very quickly even while in conflict with their neighbours, others have not.

It seems you are suggesting that conflcit with neighbours is not at all a factor when it comes to economic growth...

There are some fundamental economic issues like tax reform, that are far more important than anything to do with foreign policy.

What are you talking about mate??? Foreign policy is very important aspect of economy. US is a sole superpower today and foreign policy has a great role in it...I am not denying other factors are not important but don't neglect foreign policy...This region would have been something else should relations b/w India-CHina-Pakistan had been friendly from Day 1...Post opening the silk route $70 Billion worth trade between India and China is a testimony to what i am saying..

 

[indushek]

I think the initial response is very unjustified. Just because it's been posted by an Indian doesn't make it a lie. What the article says is true to the word. We are in dire economics straits, going worse still because of poor policy making. The PPP government is trying to sacrifice the industries in order to keep their vote bank intact by giving first preference to domestic consumers as opposed to the industries(Electricity outage/Gas outage) which is utter stupidity, the common man wouldn't give a damn if he has gas if he can't work to get food to cook with it. If these people stopped worrying about the next election and more about the economy, then they would stand a better chance of winning the next election. For the time-being though. I see difficult times ahead. The TTP have been largely defeated but not it's the energy crisis that is killing us and there's no military operation that can put an end to that, maybe a coup but Pakistan cannot afford another coup at the moment. So we are stuck between a rock and a hard place, let's hope one of them gives way soon.

Similar problems here too, while you haven't embarked on reforms like we did, we are in a stagnation stage due to stuck up reforms for further progress. If the recent debacle of the FDI increase bill is a sign the further impetus to our growth engine is stuck. Seems our subcontinental leaders are more worried about power retention rather than, people and country.

 

[sputnik]

But isnt Aryan_B going to collapse the US dollar easily this year????

http://www.defence.pk/forums/world-affairs/149036-us-dollar-will-easy-collapse.html

Aryan can make everyone collapse other than Pakistan but then that is something i am leaving for MODS to understand. as such blind patriotism is there across the forum and degrading the very quality.

What i said above is something we traders are doing on day - to day basis. and tht is the prime reason China is holding US T-bills for .

 

[Omar1984]

I think the initial response is very unjustified. Just because it's been posted by an Indian doesn't make it a lie. What the article says is true to the word. We are in dire economics straits, going worse still because of poor policy making. The PPP government is trying to sacrifice the industries in order to keep their vote bank intact by giving first preference to domestic consumers as opposed to the industries(Electricity outage/Gas outage) which is utter stupidity, the common man wouldn't give a damn if he has gas if he can't work to get food to cook with it. If these people stopped worrying about the next election and more about the economy, then they would stand a better chance of winning the next election. For the time-being though. I see difficult times ahead. The TTP have been largely defeated but not it's the energy crisis that is killing us and there's no military operation that can put an end to that, maybe a coup but Pakistan cannot afford another coup at the moment. So we are stuck between a rock and a hard place, let's hope one of them gives way soon.

The fact is Indians get extremely happy whenever something bad happens to Pakistan.

Like look at this thread, all Indians commenting in joy.

 

[deckingraj]

there is a misconception in almost whole of South east asia tht there currencies are devalued against dollar by so and so percent. The reality is the US dollar is getting strong therefore, even if u are doing same just like before, ur currency still not doing good.

The Leader of 2012 is the US dollar. currently traders across the spectrum are following is sell the gold and buy the Dollar.

When you say US dollar is going stronger then is it in real terms?? Is this a mere demand and supply gap which is causing dollar to appreciate which has been triggered by the fact that turmoil in Eurozone is forcing investors to look out for other investments??? As far as gold is concerned then logic is simple - liquidity...Due to global slowdown investing in gold is not a safe bet because of liquidity issue(less money means more difficulty in selling gold should there be need of money). In short this is going to be short term once the global economy comes back to its feet

---------- Post added at 03:26 AM ---------- Previous post was at 03:24 AM ----------

The fact is Indians get extremely happy whenever something bad happens to Pakistan.

Like look at this thread, all Indians commenting in joy.

Again us being happy or sad will not change anything...b/w this is a discussion forum..why not participate by suggesting a way out instead of cribbing about Indians??

---------- Post added at 03:27 AM ---------- Previous post was at 03:26 AM ----------

Similar problems here too, while you haven't embarked on reforms like we did, we are in a stagnation stage due to stuck up reforms for further progress. If the recent debacle of the FDI increase bill is a sign the further impetus to our growth engine is stuck. Seems our subcontinental leaders are more worried about power retention rather than, people and country.

Give am an example of politicians from across the globe who are not involved in the same fuss???

 

[sputnik]

[/COLOR]

When you say US dollar is going stronger then is it in real terms?? Is this a mere demand and supply gap which is causing dollar to appreciate which has been triggered by the fact that turmoil in Eurozone is forcing investors to look out for other investments??? As far as gold is concerned then logic is simple - liquidity...Due to global slowdown investing in gold is not a safe bet because of liquidity issue(less money means more difficulty in selling gold should there be need of money). In short this is going to be short term once the global economy comes back to its feet

dollar is getting stronger coz of few reasons:

1. In the US the economy is start getting on track. atleast the recent data related to Jobless claims, increase in home prices is suggesting the same. Due to this FIIs are liquidating their dollar investments in other economies and going back to the US as for them it is " Their environment" which they know more than India or china.

2. To facilitate this process there is a good risk free trade can be done. Shorting GOLD and Long Dollar. Gold or any other commodity appriciates when dollar get weak. GOLD, silver rally on the back of weak dollar in past few years.

People will surprise to know tht from last 2 - 3 months the US is net oil exporter from mainland US tht in the time when they are thinking of attacking Iran. the reason is again strong Dollar weak commodity.

Also from last few months both Indian central Bank and their Chinese counterpart are racking up dollar bills into their treasure and therefore, supporting the dollar rally.

 

[deckingraj]

I am no expert on this but believe do have some sense about economy...Here are my thoughts...

dollar is getting stronger coz of few reasons:
1. In the US the economy is start getting on track. atleast the recent data related to Jobless claims, increase in home prices is suggesting the same. Due to this FIIs are liquidating their dollar investments in other economies and going back to the US as for them it is " Their environment" which they know more than India or china.

Can you please throw some more light on this??...I know dollar has appreciated but as said above not in real terms....As far as unemployment numbers are concerned then they are indicators but do not give the correct picture..Last year US has seen record number of L1 and H1 rejections...Bills are being introduced to discourage companies from outsourcing...All this do have some role to play ... B/w don't you think i will loose dollars if i take my investment out in the local currencies?? Moreover high interest rates in India kind of make it more appealing for me to keep my money here unless and until i know i will earn more then 10% back home(read US)?? FII's are decreasing in India due to other factors, no??

2. To facilitate this process there is a good risk free trade can be done. Shorting GOLD and Long Dollar. Gold or any other currency appriciates when dollar get weak. GOLD, silver rally on the back of weak dollar in past few years.

Since you are a professional in this field i will not question it much. However as far as weakening gold is concerned then i believe global slowdown is the factor complemented with eurozone crisis. People are finding it hard to find out buyers for gold and thus makes it less charming as an investment as compared to $US.

People will surprise to know that from last 2 - 3 months the US is net oil exporter from mainland US tht in the time when they are thinking of attacking Iran. the reason is again strong Dollar weak commodity.

Which make sense but does not tell us why dollar is stronger...

Also from last few months both Indian central Bank and their Chinese counterpart are racking up dollar bills into their treasure and therefore, supporting the dollar rally.

I don't agree with this. RBI did not intervene much as far as rupee depreciation was due to the fact
- It was a PPP adjustment that was bound to happen due to high inflation in India
- RBI with reserves of around $300 billion do not have enough firepower to intervene especially in this era when there is eurozone crisis and global slowdown...

Having said that can you please share something which suggests that RBI is racking up the dollar thereby further supporting dollar rally??

 

[indushek]

Give am an example of politicians from across the globe who are not involved in the same fuss???

Well Politicians are all the same no doubt, but the developed countries have well built institutions like Private businesses and education institutions and responsible media etc which do not allow too much corruption and sloppy governance. However the politicians from developed countries do have certain difference like they will not sacrifice country's well being for personal gains as much as ours do. They know that they will not get back (as they don't have families ruling for generations like we do) if they don't work to atleast certain level.

Here it is a different ball game isn't it??

 

[deckingraj]

Well Politicians are all the same no doubt, but the developed countries have well built institutions like Private businesses and education institutions and responsible media etc which do not allow too much corruption and sloppy governance. However the politicians from developed countries do have certain difference like they will not sacrifice country's well being for personal gains as much as ours do. They know that they will not get back (as they don't have families ruling for generations like we do) if they don't work to atleast certain level.

Here it is a different ball game isn't it??

I believe the different ball game is the number of literates you have in developed countries vs developing...otherwise the kind of political mess that i have seen in US can easily counter your arguments about responsible media and private institutions not allowing corruption...

 

[BalwinderSingh]

The fact is Indians get extremely happy whenever something bad happens to Pakistan.

Like look at this thread, all Indians commenting in joy.

and reverse is true too

 

[indushek]

I believe the different ball game is the number of literates you have in developed countries vs developing...otherwise the kind of political mess that i have seen in US can easily counter your arguments about responsible media and private institutions not allowing corruption...

I will be honest i don't have much knowledge about Western ground situations, what i have said is what i read or heard from NRI's that's it. You being present there might know better, however don't you think with atleast one or two working institutions they are making excellent progress and we here are stuck up??

 

[sputnik]

I am no expert on this but believe do have some sense about economy...Here are my thoughts...



Can you please throw some more light on this??...I know dollar has appreciated but as said above not in real terms....As far as unemployment numbers are concerned then they are indicators but do not give the correct picture..Last year US has seen record number of L1 and H1 rejections...Bills are being introduced to discourage companies from outsourcing...All this do have some role to play ... B/w don't you think i will loose dollars if i take my investment out in the local currencies?? Moreover high interest rates in India kind of make it more appealing for me to keep my money here unless and until i know i will earn more then 10% back home(read US)?? FII's are decreasing in India due to other factors, no??


Since you are a professional in this field i will not question it much. However as far as weakening gold is concerned then i believe global slowdown is the factor complemented with eurozone crisis. People are finding it hard to find out buyers for gold and thus makes it less charming as an investment as compared to $US.



Which make sense but does not tell us why dollar is stronger...




I don't agree with this. RBI did not intervene much as far as rupee depreciation was due to the fact
- It was a PPP adjustment that was bound to happen due to high inflation in India
- RBI with reserves of around $300 billion do not have enough firepower to intervene especially in this era when there is eurozone crisis and global slowdown...

Having said that can you please share something which suggests that RBI is racking up the dollar thereby further supporting dollar rally??

As far as US Economy is concerned, it doesn't take guidance from any single reason. Here in this case, u are seeing Jobless data only. which is one of the reason among many reasons. Just take the case of Australian Dollar, It is not much being used in International trade, but due to strong economy, it remained strong from past few quarters. The US economy is also doing well, coz not affecting by Euro crisis. THE US is almost untouched from wht is happening there.

---- Yes, you are right tht if FIIs are going out at this time then there are making double losses. Coz they probably entered in India when Ruppee was at 46 - 48 Range and now it is at 52 - 54. mind well indian Dollar index has taken severe beating compare wht we see on day to day basis. today Nifty is at 4700 levels in ruppees terms but our dollar index for nifty is hovering around at 4000 levels. Pathetic to say the list.
From FIIs point of view it is good to get rid off indian exposure now. Reason is Ruppee is well possed for 56 - 58 Range, coming elections in India and our Current account deficit.

--- Higher Interest rates in India is good only for those who wants to go for FIXED deposit in BANKS. But wht abt business, there cost of burrowing goes up like anything and there are the real business drivers not bank deposits. Indian corporates are feeling this pressure from Domestic as well as international side.

Domestic side - RBI was increasing rates from past few quarters
International side - Strong Dollar made FCCB Bond redemption hard and expensive for them.

--- You are not right for GOLD. GOLD is excellent hedge against inflation. whenever there is huge inflation issues, central banks buy gold. Always follow thumb rule, when in uncertainity regarding global turmoil, buy GOLD. When big institution buy or sell some assets they hardly care about price. World bank was net seller of GOLD when it was at 15-16000 in india where as RBI and china are net buyers. Currently, JApan is biggest exporter of GOLD. it is coming from Japanese household not from their Govt.

--- Currently, RBI is prepering for Rs 58 = 1 dollar. It will not intervene in future too. Indian Banking System now moving to Basel norms and for tht almost all of them require capital infusion. and thts why recently GOVT. allowed foreign individuals to invest in Indian stock market. thts short term not even worth to call solution. on 16 Dec 2011, there was an intervention from RBI duing to restriction it imposed on local dealers.
Although I don't have any link to support this and tht they are buying dollars but then 1 needs to take into account from last 1 year of their some of actions.