KARACHI: Political turmoil in Pakistan has clouded the economic outlook of the South Asian country, with the stock market recording erosion of more than 1,200 points and financial experts predicting a “difficult year” ahead.
Last week, international credit rating agency Moody’s termed an ongoing no-confidence motion against Prime Minister Imran Khan as “credit negative” for the country.
On Monday, the Pakistani stock market’s benchmark KSE 100 index declined by 2.7 percent, or 1,250 points, to close at 43,902 points as investors resorted to selling amid higher uncertainty following Sunday’s political developments. These included the deputy speaker of the National Assembly, who belongs to Khan’s party, blocking a vote on the no-confidence motion from taking place, and the president subsequently dissolving the lower house of parliament on the PM’s advice, triggering political and constitutional crisis in the country.
“Stocks fell across the board on investor concerns for political crises,” Ahsan Mehanti, Chief Executive Officer of Arif Habib Corporation, told Arab News. “Rupee instability, slump in global crude oil prices and investor concerns for political noise, current account deficit and higher import bills played a catalyst role in record bearish close.”
Analysts say the political crisis may also lead to a delay in economic reforms and, most importantly, in talks with the International Monetary fund for the completion of a $6 billion loan program whose seventh review is ongoing.
“Markets negatively respond to uncertainty and the current political crisis has substantially increased uncertainty for the next several months,” said Haroon Sharif, former Chairman Board of Investment. “As Moody’s has pointed out, this situation will lead to a slowdown in reforms.”
“That means a potential delay in IMF tranche, higher premium on bond and sukuk issues and further pressure on current account,” Sharif said. “For the medium term, I see a slowdown in CPEC (China Pakistan Economic Corridor) industrial cooperation, some withdrawal of diaspora investments and a hold on future investments. So, it’s going to be a difficult year ahead from an investment perspective.”
Pakistan is undergoing its seventh review under the IMF’s program and has so far received $3 billion out of the stipulated $6 billion. Moody’s said last week discussions between Pakistan and the IMF appeared to have stalled since early March, with the IMF expressing concerns over a government relief package in response to rising inflation.
Pakistani senior economists have also expressed concern over the political situation, saying the uncertainty was worrying investors.
“The current state of affairs in Pakistan has made local and foreign investors stay away from active business routines,” senior economist Dr. Ashfaque Hassan Khan said. “The impact of political crisis are visible and are reflected in the sharp depreciation of Pak rupee which is trading at all time low.”
Pakistan has faced significant pressure on its foreign-exchange reserves in recent months, amid elevated global commodity prices and a recovery in domestic demand. The Russia-Ukraine military conflict, which has driven up global commodity prices, has amplified pressure on its external position.
Official forex reserves of Pakistan have decreased by $2.915 billion to $12 billion, mainly due to payments made to external creditors including China. The South Asian country is also expecting $2.3 billion to be returned by China after Beijing agreed to rollover a syndicated facility.
The Pakistan Finance ministry last week said Pakistan’s economic performance was strong and still on a trajectory compatible with an economic growth target of around five percent in the current fiscal year.
However, the ministry also warned that recent geopolitical tensions, in particular the Ukraine crisis, were the most important external risk factor, while domestic political conditions were also building domestic risks.
Pakistan equities plunge by over 1,200 points as political turmoil clouds economic outlook
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Pakistan equities plunge by over 1,200 points as political turmoil clouds economic outlook
- Analysts say crisis may lead to delay in economic reforms, talks with IMF for completion of $6 billion loan program
- Pakistan has faced pressure on forex reserves in recent months amid elevated global commodity prices
Amid investment push, Uzbek foreign minister in Pakistan to discuss trade, regional connectivity
- Bakhtiyor Saidov’s visit comes at a time when Pakistan wants to bolster economic ties with other states amid financial challenges
- Pakistan is interested in reliable Central Asian energy sources and sees Uzbekistan as gateway to other markets in the region
ISLAMABAD: Uzbekistan’s Foreign Minister Bakhtiyor Saidov arrived on a two-day visit to Pakistan on Tuesday night, confirmed a brief statement circulated by the foreign office, to hold meetings with senior administration officials in Islamabad and discuss trade and regional connectivity.
Saidov’s visit to Pakistan comes at a time when the country is trying to bolster its economic ties amid ongoing financial challenges.
The diplomatic engagement with Uzbekistan follows a series of visits by officials and business delegations from nations like Saudi Arabia, highlighting a broader strategy to attract foreign investment to vital Pakistani economic sectors such as energy, mining, infrastructure and technology.
The minister’s trip also underscores the strengthening bilateral relations between two countries and aligns with Pakistan’s stated objective of enhancing regional connectivity to ensure greater economic prosperity.
“Foreign Minister Saidov will call on Prime Minister Muhammad Shehbaz Sharif and hold in-depth talks with Deputy Prime Minister and Foreign Minister Mohammad Ishaq Dar on a wide range of bilateral issues of mutual interest, with special focus on trade and connectivity,” the foreign office said in a statement released before his arrival.
“The visit of the Foreign Minister of Republic of Uzbekistan is expected to provide fresh impetus to the friendly relations between the two countries,” it added.
Pakistan views Central Asian countries as crucial partners in enhancing regional trade and energy security.
The region’s vast natural resources, especially oil and gas, can be vital for Pakistan to secure reliable energy sources and diversify its energy imports.
Uzbekistan plays a key role in this equation due to its geographical position and resources, acting as a gateway for Pakistan to access other markets in the region.
Last year, Pakistan’s former caretaker prime minister Anwar-ul-Haq Kakar visited the Central Asian country to participate in an Economic Cooperation Organization (ECO) meeting where he reiterated his country’s commitment to regional cooperation and economic integration.
Pakistan invites China to establish industrial zones for electric car manufacturing
- Earlier this year, Pakistani car maker Sazgar Engineering unveiled electric car made in collaboration with China
- Road transport is significant contributor to pollution as around 23 percent of Pakistan’s greenhouse gases come from vehicles
ISLAMABAD: Pakistan’s planning minister has invited China to collaborate with Islamabad in setting up industrial zones to manufacture electric cars amid a renewed push to attract foreign investment, state news agency APP reported on Wednesday.
The government of Pakistan approved an ambitious National Electric Vehicles Policy (NEVP) in 2019 with the goal of electric vehicles comprising 30 percent of all passenger vehicle and heavy-duty truck sales by 2030, and an even more ambitious target of 90 percent by 2040. For two- and three-wheelers, as well as buses, the policy set a goal of achieving 50 percent of new sales by 2030 and 90 percent by 2040.
In a meeting with Chinese officials on Tuesday, Planning Minister Ahsan Iqbal invited them to collaborate on the production of electric cars.
“He emphasized Pakistan’s aim to establish industrial zones for the manufacturing of electric cars in collaboration with China, leveraging Pakistan’s competitive advantage to reduce overall production costs and create employment opportunities for Pakistani workers,” APP reported.
Earlier this year, Sazgar Engineering, one of Pakistan’s leading car manufacturers, unveiled the electric vehicle “ORA 3,” manufactured in collaboration with Chinese car manufacturer Great Wall Motors (GWM).
The urban areas of Pakistan exhibit some of the world’s highest levels of air pollution, primarily due to sub-2.5 μm particulate emissions. This issue significantly impairs both the country’s economy and the quality of life of its residents. Road transport is a significant contributor to air pollution as around 23 percent of Pakistan’s greenhouse gas emissions originate from vehicles.
On Tuesday, Prime Minister Shehbaz Sharif also met a delegation of Japanese industrialists in Islamabad and invited them to invest in Pakistan’s electric automotive industry.
“There is a wide potential for investment in the electric vehicle industry in Pakistan and Japanese companies with the best technology can take full advantage of it,” Sharif told the Japanese group.
Pakistan court orders Imran Khan’s wife to be moved from house arrest to Adiala Prison
- Bushra Bibi had petitioned court to shift her from Bani Gala home to Adiala Jail where Khan is also imprisoned
- Bushra has been handed two sentences, 14 years in graft case and 7 years for violating Pakistan’s marriage law
ISLAMABAD: The Islamabad High Court (IHC) on Thursday ordered that ex-premier Imran Khan’s wife Bushra Bibi be transferred from her Banigala residence, declared a sub-jail, to Adiala Jail, where her husband is incarcerated.
Bushra has been living under house arrest at her husband’s sprawling Bani Gala mansion in Islamabad since Jan. 31 when both were sentenced to 14 years in prison in a case that relates to accusations they undervalued gifts from a state repository and gained profits from selling them while Khan was prime minister from 2018-22. Khan is jailed at Rawalpindi’s Adiala Jail.
In February, Khan and his wife were also sentenced to seven years on charges they violated the country’s marriage law when they wed in 2018 — the fourth sentence for Khan and the second for his wife.
Bushra had petitioned the court several months ago that she should be moved to Adiala and the IHC had reserved its verdict in the case on May 2.
“Court has annulled notification of house arresting former first lady Bushra Bibi at Bani Gala sub-prison and ordered her transfer to Adiala Prison,” Khan’s Pakistan Tehreek-e-Insaf political party said in a message to reporters.
During Thursday’s hearing when the court reserved its judgment, Bushra’s lawyer Usman Gill said after her sentencing in the state repository case by the trial court, his client went to Adiala Jail as per the trial court order which was also forwarded to the jail superintendent. But on the orders of the interior ministry, the chief commissioner issued an “illegal notification for transfer” to Bani Gala, the lawyer argued.
“There was no instruction from the authorities concerned regarding the transfer from Adiala Jail to Banigala,” he said.
“Neither the provincial government nor did the Punjab prisons inspector general issue any such directive [for transfer] … The place of imprisonment was to be determined by the trial court and not the chief commissioner.”
The state’s counsel argued that Bushra was moved to Bani Gala because of security threats.
“Were the 141 women who were brought to Adiala after Bushra less privileged?” the judge hearing the case asked, saying they too should be imprisoned at their homes then.
“Sometimes you say that [you] cannot present her [Bushra] in the court as there are threats and at times, you say that the jail is not secure. Are you secure?” the judge quipped. “If I am confined in my home by my own will, I would be very happy but how can a prisoner’s property be turned into a sub-jail against his will?”
The IHC subsequently reserved its verdict on the petition.
CASES
In a separate petition to the court filed last month, Bushar, a deeply religious woman widely believed to be Khan’s spiritual guide, alleged she was being poisoned through contaminated food and subjected to “mental and physical torture which is becoming a serious threat to her health and life.” She also alleged that her room and bathroom had been bugged and multiple hidden cameras installed in a “blatant violation of her privacy, dignity and honor.”
The petition said Bushra was only given ten minutes for meetings with family members and lawyers, with five jail staff supervising at all times.
Khan was first jailed after being handed a three-year prison sentence in August 2023 by the Election Commission for not declaring assets earned from selling gifts worth more than 140 million rupees ($501,000) in state possession and received during his premiership. In January, Khan and Bushra were handed 14-year jail terms following a separate investigation by the country’s top anti-graft body into the same charges involving state gifts.
An anti-graft court in Islamabad also handed Khan a 10-year jail term in January for revealing state secrets, a week before national elections on Feb. 8. The ruling on his marriage to Bushra and a seven-year sentence each for both also came ahead of the polls.
Khan has also been indicted under Pakistan’s anti-terrorism law in connection with violence against the military that erupted following his brief arrest related to the Al-Qadir case on May 9. A section of Pakistan’s 1997 anti-terrorism act prescribes the death penalty as maximum punishment. Khan has denied the charges under the anti-terrorism law, saying he was in detention when the violence took place.
Khan’s convictions, which mean he is banned from holding public office, ruled the 71-year-old out of the February general elections. Arguably Pakistan’s most popular politician, Khan says all cases against him are motivated to keep him out of politics.
Taliban reject Pakistan’s claim Afghan bomber involved in deadly attack on Chinese dam engineers
- Afghan defense ministry says the killings of Chinese nationals reflected the weakness of Pakistan’s security agencies
- Pakistan believes Kabul not doing enough to tackle militant groups, launched airstrikes targeting them in Afghanistan
KABUL: The Taliban defense ministry on Wednesday rejected Pakistan’s allegations that Afghans were involved in an attack on Chinese engineers, as ties between the neighboring nations sour amidst rising insecurity.
Pakistan’s military had said at a press conference on Tuesday that a suicide bomb attack in March in Pakistan’s northern Khyber Pakhtunkhwa province, that killed five Chinese engineers, was planned in neighboring Afghanistan, and that the bomber was an Afghan national.
“Afghans are not involved in such matters,” said Mufti Enayatullah Khorazmim, the spokesperson for Afghanistan’s Taliban-run Ministry of National Defense.
“Blaming Afghanistan for such incidents is a failed attempt to divert attention from the truth of the matter and we strongly reject it,” he added.
A suicide bomber rammed a vehicle into a convoy of Chinese engineers working on a dam project in northwest Pakistan in March, killing six people.
“The killing of Chinese citizens in an area of Khyber Pakhtunkhwa that is under tight security cover by the Pakistan Army shows the weakness of the Pakistani security agencies,” Khorazmim said.
Relations between Pakistan and Afghanistan have soured in recent months. Islamabad says Kabul is not doing enough to tackle militant groups targeting Pakistan and in March Pakistan carried out airstrikes targeting militants on Afghan territory.
Last year, Pakistan expelled nearly 370,000 undocumented Afghan nationals, saying the majority of suicide attacks against its security forces were carried out by Afghans, a charge Kabul rejected.
Pakistan’s military spokesman said on Tuesday that security for 29,000 Chinese nationals in Pakistan, many of them working on infrastructure projects, was the top priority for security institutions.
The Taliban are also seeking economic ties with China, the first country to formally appoint an ambassador to Kabul under the Taliban, and wish to join China-Pakistan Economic Corridor (CPEC), which is Beijing’s $65 billion investment in development and infrastructure.
Scientists link intense rainfall to climate change after floods in Pakistan, UAE
- Climate experts say warmer oceans lead to greater evaporation and warmer air can hold more water vapor
- Pakistan recorded double the amount of rainfall in April, while UAE received two years of rain in a single day
PARIS: Floods have been tearing a path of destruction across the globe, hammering Kenya, submerging Dubai, and forcing hundreds of thousands of people from Russia to China, Brazil and Somalia from their homes.
Though not all directly attributed to global warming, they are occurring in a year of record-breaking temperatures and underscore what scientists have long warned – that climate change drives more extreme weather.
Climate change isn’t just about rising temperatures but the knock-on effect of all that extra heat being trapped in the atmosphere and seas.
April was the 11th consecutive month to break its own heat record, the EU climate monitor Copernicus said on Wednesday, while ocean temperatures have been off the charts for even longer.
“The recent extreme precipitation events are consistent with what is expected in an increasingly warmer climate,” Sonia Seneviratne, an expert on the UN-mandated IPCC scientific panel, told AFP.
Warmer oceans mean greater evaporation, and warmer air can hold more water vapor.
Scientists even have a calculation for this: for every one degree Celsius in temperature rise, the atmosphere can hold seven percent more moisture.
“This results in more intense rainfall events,” Davide Faranda, an expert on extreme weather at the French National Center for Scientific Research (CNRS), told AFP.
In April, Pakistan recorded double the amount of normal monthly rainfall — one province saw 437 percent more than average — while the UAE received about two years’ worth of rain in a single day.
This, however, doesn’t mean everywhere on Earth is getting wetter.
Richard Allan from the University of Reading said “a warmer, thirstier atmosphere is more effective at sapping moisture from one region and feeding this excess water into storms elsewhere.”
This translates into extreme rain and floods in some areas but worse heatwaves and droughts in others, the climate scientist told AFP.
Natural climate variability also influences weather and global rainfall patterns.
This includes cyclical phenomenon like El Nino, which tends to bring heat and rain extremes, and helped fuel the high temperatures seen over land and sea this past year.
While natural variability plays a role “the observed long-term global increase in heavy precipitation has been driven by human-induced climate change,” said Seneviratne.
Carlo Buontempo, a director at Copernicus, said cycles like El Nino ebb and flow but the extra heat trapped by rising greenhouse gas emissions would “keep pushing the global temperature toward new records.”
Considering the overlapping forces at play, attributing any one flood to climate change alone can be fraught, and each event must be taken on a case-by-case basis.
But scientists have developed peer-reviewed methods that allow for the quick comparison of an event today against simulations that consider a world in which global warming had not occurred.
For example, World Weather Attribution, the scientists who pioneered this approach, said the drenching of the UAE and Oman last month was “most likely” exacerbated by global warming caused by burning fossil fuels.
ClimaMeter, another rapid assessment network who use a different methodology, said major floods in China in April were “likely influenced” by global warming and El Nino.
“It can be difficult to disentangle global warming and natural variability” and some weather events are more clear-cut than others, said Flavio Pons, a climatologist who worked on the China assessment.
In the case of devastating floods in Brazil, however, ClimaMeter were able to exclude El Nino as a significant factor and name human-driven climate change as the primary culprit.
Many of the countries swamped by heavy floods at the moment — such as Burundi, Afghanistan and Somalia — rank among the poorest and least able to mobilize a response to such disasters.
But the experience in Dubai showed even wealthy states were not prepared, said Seneviratne.
“We know that a warmer climate is conducive to more severe weather extremes but we cannot predict exactly when and where these extremes will occur,” Joel Hirschi from the UK’s National Oceanography Center told AFP.
“Current levels of preparedness for weather extremes are inadequate... Preparing and investing now is cheaper than delaying action.”
