Tuesday, Aug 19, 2008
Dubai: Following the resignation of President Pervez Musharraf yesterday, the country's fledging economic stability will have a sluggish effect on Pakistanis investing in the UAE, officials said.
Hadi Shahid, vice-president of membership at the Pakistan Business Council in Abu Dhabi, told Gulf News that the new political development "will certainly slow down the withdrawal of money from Pakistan and the influx to the UAE."
He said that the country had been experiencing political and economic uncertainty since the elections.
"The president's decision to withdraw himself from the race has given signs of certainty in the country. This will bring development and continuity in Pakistan," Shahid said.
Within 20 minutes of Musharraf's decision, the Pakistani Rupee and the stock exchange in Islamabad experienced an upswing.
Tanweer Khwaja, director of the Pakistan Business Council in Dubai, told Gulf News that since people are clear on the establishment of parliament's supremacy, the effects can now be witnessed.
"The stock market has reacted very nicely. We are seeing 450 points increase in the stocks as of the moment. This clearly shows that the decision will have a positive effect on Pakistan's economy," Khwaja said.
At the same time, the rupee appreciated 1.5 per cent against the dollar.
Business relations
Asked if there will be any impact on business relations between Pakistan and the UAE, Khwaja said that it is too early to predict what the developments would be.
On whether people would prefer to invest within Pakistan from now on, Shahid said, "At least they would not withdraw the investments from Pakistan. But further investment in the country would take time, depending on the economic policies of the government."
"Hopefully the tug of war between the democrats and the presidents is over and the country will go on smooth sailing of the democracy path as well as the economic development," Shahid said.
Even with Musharraf out of the way, analysts said it is not clear the coalition government can focus on the economy as it promised, or stay in power for long.
Pakistan's annual inflation accelerated to 24.3 per cent in July, while foreign exchange reserves have fallen to levels worth less than three months of imports.
The country's trade deficit ballooned by 53 per cent to $20.7 billion (Dh76 billion) in the fiscal year 2007/08 ending June.
By Nadia Saleem
Gulf News 2008. All rights reserved.
