Pakistan is quite clearly on international investors’ radar as its economic growth has been so positively projected by international agencies. But it is difficult to sell this radiant story.

Multilateral lending agencies, the ‘big three’ international credit rating agencies (Standard & Poor’s, Moody’s and Fitch Group), Bloomberg and other recognised global media — The Wall Street Journal, Financial Times and The Economist have recently written rave reviews on the country’s economic progress.

Although detractors scoff at such positive projections by agencies, attributing them to ‘conflict of interest’, they are silenced when the rosy economic picture is corroborated by sources such as professional firms.

A report released earlier this month by PricewaterhouseCoopers (PwC), the multinational professional services firm considered to be among the ‘Big Four’ global auditors, affirmed that Pakistan’s economy could become the 16th largest world economy by 2050 based on its gross domestic product (GDP).

“What interest could PwC have in issuing an inaccurate report”, asked a person who subscribes to the view of a ‘shinning’ Pakistan. To enthusiasts who believe in the CPEC, the country could attain an even higher slot by as early as 2025.

CEO at stock brokerage, Topline Securities, Mohammad Sohail said that it was for the first time in 8-10 years that Pakistan’ economy was being so positively projected. “But it is scarcely surprising as important indicators are positively poised and the impact is visible in the market place”.

“The long run is a misleading guide to current affairs. In the long run we are all dead”

The monthly ‘Consumer Confidence Survey’, launched jointly by the SBP and IBA shows a perpetual upward movement, month-on-month, that has now reached its peak. Sohail affirmed that such positive economic outlooks are sentiment boosters, mainly for foreign investors, as they base their investment decisions on those independent sources of information.

He said that foreign investment was making its way in a wide spectrum of industrial activities, such as the power, automobile, consumer, technology, construction and infrastructure related sectors.

The exceptions were the old-fashioned textiles, leather and sugar. Sohail mentioned that to meet growing requirements, Pakistan’s cement capacity is expanding and would be twice the current in the next four years.

But for many ordinary citizens and even for people in high places in industry and finance, in the country and abroad, it is difficult to believe this positivity.

When asked what he thought of the various writings that portray Pakistan as one of the fastest growing economies — in particular the latest report by PwC — the CEO of Orient Textile Mills, Iqbal Ebrahim audibly chuckled on the phone.

He said that growth without industrialisation is a fallacy, and thought that much of the positive projections were based on the CPEC, which is believed to be a game changer for Pakistan.

“The investment of $51.5bn are loans from Chinese banks and the Asian Development Bank and not financed by the Chinese government”, he said and added that if that were the case, the scenario ahead is scary. “The projects set up in Pakistan with debts would have to be serviced; the profits that accrue from such projects would be repatriated to the country of origin and finally, where would the government find the money in five to seven years when the loan matures for repayment?” he asked.

He believed that setting up industries, job creation, improvement in farmer income and a boost to exports were the ways to spur growth. Mr Ebrahim however acknowledged that his foreign customers’ confidence in the country had improved over the terrorism issue.

Najam Ali, CEO Next Capital admitted that some fiscal space had been created, albeit mainly due to the windfall of plunge in international oil prices. He thought that the average of even a 4pc economic growth was anaemic.

“The assumption and perception of a green pasture ahead is heart warming, but it would have been more convincing if supported by tangible foreign direct investment, expansion in tax base, increased exports and flow of money in productive rather than speculative avenues”.

He echoed the sentiments of most analysts, saying that the current Bull Run at the stock market was all essentially liquidity driven.

Rashid Masood Alam, senior economist and banker who works in another country, (which he asked not to disclose) was contacted to seek the views of his foreign clients and expatriates.

He did not say much to cheer about, linking much of the money entering Pakistan, through special convertible rupee accounts, to be finding its way into speculative avenues such as the stock market and real estate. He did not see any visible investment going into the country’s capital-intensive projects.

Mr Rashid believed that PwC talking of 33 years ahead was stretching it a bit too far. “Even the State Bank of Pakistan takes the long term view of just about a decade as it issues Pakistan Investment Bonds of 10 years maturity”, he pointed out.

One person concurred and quoted John Maynard Keynes, the acclaimed British economist who once said: “The long run is a misleading guide to current affairs. In the long run we are all dead”.

Published in Dawn, Business & Finance weekly, February 13th, 2017