Economy on track

Amid the upheaval caused by the coronavirus pandemic and an economic crisis, there was some welcoming news that the Pakistan Stock Exchange has been declared as the best performing market in Asia and the fourth-best in the world.

This is seen as evidence that the government has successfully dealt with COVID-19 challenges and has put the economy back on track. Six months after the coronavirus first emerged, the country appears to have dodged the worst of the pandemic baffling health experts. The government’s economic team would be pleased that efforts to revive the economy have been successful.

The PSX has defied odds to emerge stronger as Asia’s best performing market, witnessing an increase of 30 percent since March when the government imposed a lockdown. The pandemic has now dwindled and businesses have reopened across the country and the stock market has seen a rebound. Pakistan has coped better with COVID-19 than other countries and this has impacted the economy.

Investors have flocked to the stock market, the current account deficit has turned into a surplus, and inflation has eased. The foreign currency reserves have improved to a five-month high and the rupee has appreciated. This has led to a rally at the bourse but it needs to be seen how long the upward trajectory will last as the stock market is certainly not the same as the economy.

The top three global ratings agencies have set a stable economic outlook for Pakistan. The State Bank reduced the benchmark interest rate and offered cheaper loans to businesses to avoid default, while the government disbursed cash to daily-wage earners under the Ehsaas programme. These aggressive steps and the prompt response have helped put the economy and stock market back on track.

Pakistan has efficiently handled the pandemic both in terms of healthcare and economic management. This is the first time since 2016 since the PSX has won the title as Asia’s best stock market and adds a feather in the economic performance of the government. However, we are still not of the woods as there remains a long road to a full recovery.