16/07/2018
Financial Review :
Question:
Why Economic tumble now a days?
Have political instability or political environment has direct impact on country economics?
How investors feel in all circumstances?
An irrational economic man Google all these question to get answer of these questions. His life starts with morning tea and end at night in front of TV. We all are irrational man.
As per economist, Pakistan take huge loan from international lenders but how he payback these loan. Half decade ago we all said economy is suffering due to energy and power crises but now energy crises problem solve due to effort of last government. Secondly Export has not increased as much as import increased. A question raise here that what is the Export and how country make strong its economy through export. Foreign Reserve increased with Export. All developed economies have higher export against its Import. They receive more foreign reserve from export and pay less foreign reserve in import mean they have higher exports compare to its imports. Export what we sell other countries and imports are what we buy from other countries. Our Economy tumbles now days due to high current account deficit. We have not enough foreign reserve to pay back loans and Import expense. We paid interest of foreign loan in foreign currency.
Moreover Politics have very strong role in economy. Political stability increase business man confidence in investment. Policies from government side play important role in business investment. If country politics are stable there policy will sustain for long time. Unstable government changes country business policies that cause reduce investor confidence. These business policies are Tax law e.g (Export and Import duties), environmental Law (Forest, environment protection), company registration law (SECP rules), labor Law (Wages, Welfare) and so on. All these policies have positive impact on economy it’s are positive for business man and Negative impact on economy if it’s are negative for business man. So we need stable democratic government.
In conclusion, investors see critically to entire situation. As per our country condition, they are showing low confidence. So that why Pakistan stock market are fluctuating. Inflation are increasing people are losing their purchasing power, all imports are becoming more expensive and Pakistan currency PKR continuously deteriorating against USD $. Now all investor are focus on political situation of country PML N, PTI and PPPP which party make government at Federal level and what will be there business policies. It all will become certain at 25th of July 2018.
