S&P improves Pakistan's credit-rating outlook, GDP projections

Standard and Poor's (S&P) Ratings Services gave revised projections for Pakistan's economy by upping its outlook on the country's long-term 'B-' credit rating to 'positive' from 'stable', but warned that security risks continue to threaten the government policy responses.
S&P yesterday revised projections for Pakistan's average real Gross Domestic Product (GDP) growth for 2015 to 2017 to 4.6 per cent from 3.8 per cent, according to a report in the Dawn.
The report said that the per-capita GDP was estimated to increase 4.3 per cent to about USD 1,460 this year, from 5.4 per cent in 2014 as S&P affirmed Pakistan's 'B-' long-term and 'B' short-term sovereign credit ratings.

However, the S&P analysis also said that Pakistan's internal and external security risks continue threatening governmental and institutional effectiveness.
The material risk of domestic conflict and social upheaval continue to challenge policy responses.
Limited transparency and governance, corruption, nepotism and lack of adequate data undermine the effectiveness and stability of Pakistan's policymaking and political institutions.

The projections said Pakistan's GDP per capita is likely to average 2.6 per cent over the period 2015-2019 due to greater confidence in agriculture and construction sectors, and in Pakistan's trading partners.
At the same time it says inflation is expected to average 4.8 per cent over the period 2015-2019.

Year-on-Year Consumer Price Index inflation followed a downward trend starting October 2014, and continues to decline in 2015, according to a data in the State Bank of Pakistan's inflation monitor.
Inflation slowed to 2.1 per cent in April 2015 from 2.5 per cent in the preceding month due to lower fuel and food prices - the lowest level since 2003.
The favourable projections have been attributed to improved collections and tightened expenditure mainly in line with International Monetary Fund reforms.