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economicletter
a weekly publication of The Institute of Bankers Pakistan
Pakistan
The World Bank expects GDP growth to rise to
3.9% in 2011-12 and further to 4.2% in 2012-13 after
having slowed down to 2.4% in 2010-11 against 4.1%
in 2009-10.
The Asian Development Bank is to provide a credit line
of $ 513 mn of which $ 270 mn would be utilized for
building Khanki barrage at a new site on river Chenab
in the Punjab while $ 243 mn would be used for
improving infrastructure in the power sector.
The SBP expects home remittances to reach a level of
$ 13 bn or more in the current fiscal ending June 2012
against received $ 12 bn last fiscal. The remittances
at $ 6.3 bn during July-December 2011 are already
higher by 19.54% over the same period of 2010.
According to SBP, liquid foreign exchange reserves as
on January 13, 2012 stood at $ 16.902 bn of which
$ 12.688 bn was held by the SBP and the rest with
banks.
According to SBP, net inflow of foreign investment during
July-December 2011 fell by 63.6% over the same period
of 2010 to $ 386.1 mn against $ 1.06 bn. Of the total,
foreign direct investment was lower by 36.7% to
$ 531 mn against 839.6 mn during the above periods.
Foreign portfolio investment was lower by 165% with
an outflow of $ 144.6 mn during July-December 2011
against an inflow of $ 221.5 mn in the same period of
2010.
According to SBP, the current account posted a deficit
of $ 2.15 bn in the first half of the current fiscal against
a surplus of $ 8.0 mn in the same period last fiscal,
with the trade deficit widening by 38.48% to $ 11.47
bn and home remittances rising by 19.54% to $ 6.32
bn (the two major components of the current account)
during the above periods.
According to SBP, monetary expansion in the first half
of the current fiscal was recorded at 6.96% against
8.97% in the same period last fiscal. Net foreign assets
inflow was negative to the tune of Rs 130 bn against
positive Rs 126 bn in the same period last fiscal.
Private sector credit off-take during July-December
2011 was higher at Rs 193 bn against Rs 163 bn in the
same period of 2010.
According to SBP, cash recovery of non-performing
loans (NPLs) by banks and DFIs fell to Rs 13.779 bn
in the third quarter of 2011 against 17.237 bn in the
second quarter of the year, a decline of 20%.
The National Highways Authority has awarded a
Rs 24.93 bn contract to a Malaysian company to build
the Karachi-Hyderabad Motorway on the basis of
build-operate-transfer (BOT) over a three years period.
The government is considering to adopt the World
Bank’s Disbursement Link Indicators (DLI) mode
of financing by making projects fast-track for early
releases. The DLI mode of financing is a combination
of project and program financing releases which is
made upon implementation of agreed indicators of
the project. This would lead to mitigate the impact of
program lending and budgetary support.
The Pakistan-Afghanistan Joint Economic Commission
have agreed to promote bilateral trade from the current
volume of $ 2.5 bn to $ 5.0 bn by 2015 through greater
participation of the private sector of the two countries.
Tentative private sector estimates suggest that wheat
cropped area in the ongoing rabi season may have
fallen short by 2-2.5% over the previous crop season’s
8.9 mn hectares which may result in total output to be
lower at 23 mn tons against the target of 25 mn tons
set at the beginning of the season.
>>
Markets at a glance
Weekly
Review
KIBOR (6months)
Bid %
Offer %
Foreign Exchange Rates
GBP (£)
Euro (€)
USD ($)
KSE
100 Index
Gold Rate
(10gm)
Beginning
11.68
11.93
Rs 138.39
Rs 114.94
Rs 90.24
11,027
Rs 48,428
Ending
11.68
11.93
Rs 138.86
Rs 115.87
Rs 89.99
11,743
Rs 48,514
Change
0
0
+ 0.47
+ 0.93
- 0.25
+ 716
+ 86
Volume 7, Issue No. 3 | January 20, 2012
a weekly publication of The Institute of Bankers Pakistan
The government is to auction five licenses including
3G/4G spectrums in March with an estimated revenue
of $ 800 mn.
Total
consumption
of
petroleum
products
(ex non-energy) in the first half of the current fiscal
rose by 2.2% over the same half last fiscal to 9.87 mn
tons.
International
According to the U.N. Food & Agriculture Organization
(FAO), food prices globally averaged higher in 2011 by
about 35% over 2010, highest single year rise since the
early 1970s.
China’s foreign trade in 2011 stood at an all-time high
at $ 3.6 trillion but the trade surplus was lower at $ 155
bn in the year against $ 183 bn in 2010. With economic
growth slowing both in the U.S. and Europe, the country
proposes to put in place measures to boost its trade
volume by about 10% in 2012.
Inflation in China, measured by the consumer price
index (CPI), was recorded at 5.4% in 2011 against the
government target of containing it at 4% or less and
higher against the level of 3.3% in 2010. It had peaked
at 6.5% in July last year.
The central banks of China and the United Arab Emirates
have signed a currency swap agreement worth 35 bn
yuan ($ 3.54 bn) valid for three years.
The Chinese government has placed the country’s
GDP growth in 2011 at 9.2% against 10.4% in 2010.
Saudi Arabia and China have signed several
memorandums of understanding (MoUs) including
building of a petrochemical plant in Tianjin and a
nuclear energy power plant in the Kingdom for civilian
use. Saudi Arabia is the largest single supplier of
crude oil to China accounting for 11% of total Chinese
imports. Bilateral trade in the first eleven months of
2011 between the two countries stood at $ 58.5 bn.
Saudi Arabia has signed a deal worth 30.8 bn riyals
($ 8.2 bn) with a Spanish government-led consortium
to build a railway line to connect Mecca and Medina,
the two holiest cities in the Muslim world, with the port
city of Jeddah.
Japan has signed a deal to import natural gas from
Australia worth $ 34 bn with supply scheduled by
end-2016.
South Korean central bank has left its key lending rate
unchanged for the seventh straight month at 3.25%.
GDP growth in Russia in 2011 was recorded at 4.2%
against 4.0% in 2010. Despite a capital outflow of
$ 84 bn last year, the country yet ended 2011 with a
budgetary surplus of 0.8% of GDP. Inflation at 6.1% in
2011 was lowest for 21 years.
Standard and Poor’s, an international credit rating
agency, has cut by a notch the sovereign rating of France,
second largest economy in the 17-ation eurozone
area after Germany, from “AAA” to “”AA+”. Moody’s
Investors Services has reaffirmed France’s credit
rating as “AAA”.
Fitch has downgraded Russia’s outlook to “stable” from
“positive” but has reaffirmed the country’s long-term
debt at “BBB”. The downgrade has been cited as due
to political uncertainties and capital outflows.
Standard and Poor’s has downgraded the European
Financial Stability Facility (EFSF) by a notch from
“AAA” to “AA+”.
Unemployment in Britain at end-November 2011 stood
at 8.4% of workforce (2.68 million people), highest for
17 years.
U.S. trade deficit in November 2010 stood at $ 47.8 bn
against $ 43.3 bn in October of the year. Exports rose
by 1.3% to $ 225.6 bn while imports fell by 0.9% to
$ 177.8 bn during the above periods.
Editor: Syed Mahdi Mustafa
Published by: The Institute of Bankers Pakistan, M.T. Khan Road, Karachi 74200, Pakistan
Phone: (021) 35689718, 35680783 | Fax: (021) 35683805 | Email: [email protected] | Website: www.ibp.org.pk
General Disclaimer: IBP Weekly Economic Letter is based on information obtained from local and international print and electronic
media. IBP has not verified this information and no warranty, expressed or implied, is made that such information is accurate, complete
or should be relied upon as such. In no circumstance IBP and its team members would be liable for any incidental or consequential
damage that may incur from the use of information contained in IBP publication(s).
Volume 7, Issue No. 3 | January 20, 2012