By IRNA,
Islamabad : The ongoing suicide attacks and bomb blast in Pakistan have not only caused casualties and fear among masses, but also badly hit the country’s economy.
The recent suicide attack on a hotel in Islamabad has further aggravated security concerns among the investors and businessmen from North America and Europe, Pakistan’s major trading partners.
The hotel owners say that about 80 percent of the confirmed bookings have been canceled after the Marriott attack.
US and UK have asked their citizens to avoid unnecessary travel of Pakistan and not to stay there in five star hotels. The travel advisory has also sent a negative massage to the travelers of the other countries.
Pakistan economic indicators are worsening. It is estimated that alone remittances and loans would not support economic in the long term due to prolonged negative indicators of macro economy.
Foreign investment in Pakistan stood at $5.193 billion last fiscal year as compared to $8.42 billion during 2006-07. Major reason behind this dip was the foreign investors were reluctant to invest in Pakistan due to political unrest and negative reports regarding its stock markets.
During July 2008, CPI inflation stood at 24.33 percent as against 6.37 percent recorded in corresponding month of the last fiscal.
The approach of the new government in dealing with these problems appears to be in the right direction but the soaring fuel prices, and food costs, have driven inflation to a six-year high.
Pakistan receives economic aid from several sources as loans and grants. The International Monetary Fund (IMF), World Bank (WB), Asian Development Bank (ADB), etc provides long term loans to Pakistan.
Pakistan also receives bilateral aid from developed and oil-rich countries.
Two key factors responsible for the increase in prices are sharply higher food prices and increased fuel costs. In the case of food, the problem stems from difficulties with wheat production, which have been compounded by the government’s slow response to supply problems.
Pakistan suffered a merchandise trade deficit of $13.528 billion for the financial year 2006-7.
The gap has considerably widened since 2002-3 when the deficit was only $1.06 billion.
Services sector deficit for 2006-2007 stood at $4.125 billion which equals the services export of $4.125 billion for the same year.
It is worth mentioning that the WB has also said no to the Pakistani request for providing about $0.50 billion emergency package while advising the government for approaching International Monetary Fund (IMF).
This indicates that the World Bank is once again pushing Pakistan towards IMF and to face its hard conditions.
Though pledges of Friends of Pakistan group have given some support to its economy yet the law and order situation needs to be improved a lot for the healthy atmosphere for investment.