KARACHI, Aug 1: Security concerns are real but as long investors continue to get good returns on their investment in Pakistan the strong trend of foreign direct investment will persist.
More than anything else the surroundings with vibrant galloping India on the east and very rich Arab world in the West Pakistan is most likely to maintain the growth pace in future. Pakistan is a natural destination for multi million funds sitting in Middle East waiting to be invested.
Dr Norbert Walter, Chief Economist Deutsche Bank Group and Managing Director Deutsche Bank Research, expressed these views in response to a question while talking to media after his presentation ‘World economic cycle - mature financial markets nervous’ here on Wednesday.
Referring to security situation for foreigners, Mr Walter said that his presence in the city demonstrated that business opportunities outweigh the risk factor. He was on his annual trip to Pakistan.
He said his bank was not visible as it was not into retail banking in the country. “We serve the country’s corporate citizens”.
He saw high current account and trade deficit as causes of concern but hailed macro management that led to deceleration of inflation in difficult times. He highlighted the benefits of steady inflow of remittances that, in his view, leads to social stabilisation besides putting in people’s hands the seed money to start a new business.
Earlier in his presentation, he predicted the global economy to grow for the fifth year and expect the trend to continue into 2008. However, there were numerous risks that point towards a difficult 2009.
He said there was possibility of a slowdown in the US economy if the housing recession spilled out to other sectors. The difficulties in Japan may persist for a while. He saw better economic prospects for Europe where business sentiments were at 20 years high.
He said business mood was more positive than the actual companies’ performance. He saw India’s economic prospects brighter than China that he felt would be caught up in environmental bottlenecks, etc.
Africa will also develop at a faster pace, he said.
He felt both bonds and real estate asset markets were overpriced whereas capital markets on the strength of profit/earning ratios were still cheap.
The speaker was introduced and welcomed by Chief Country Officer Deutsche Bank AG Pakistan Shazad G. Dada.
