Despite imposition of the state of emergency, macro-economic environment will remain stable and Pakistan's gross domestic product (GDP) growth will remain at 6.9 percent, driven by domestic consumption, economists said. They believed that if the same situation would linger on, then it could hurt the foreign inflows, besides putting pressure on the foreign exchange reserves.
Leading economist Muzammil Aslam, commenting on the situation, said that emergency had not affected the economy and business practices as the old economic policies were being followed. There were no restrictions on capital movement and foreign exchange regulations had not been disturbed, he said.
Although, two leading credit rating agencies Moody's and S&P had downgraded Pakistan's credit rating outlook from stable to negative, the country may not face capital fight and turmoil in the financial and forex markets.
Referring to Holland's stoppage of aid, he said no country had discontinued the aid and assistance to Pakistan. As regards the country's exports, he said the emergency would not affect the momentum of exports as the all type of industries were functioning normally and there was no indication that export orders would be delayed.
Aslam said that if political uncertainty continued for period, the it could hurt foreign flows, as the issuance of National Bank of Pakistan GDR had delayed. "Obviously, everything here hinges on how long the uncertainty continues. We believe the uncertainty will not last for long," he added.
He, however, warned if the current situation lingered on and it led to a backlash from the opposition, this slow down the private foreign fund inflow. This situation could be manageable if Pakistan's external deficit could be financed by reserves, he added.
In that case the country's reserves would draw down and external debt could, in turn, put some pressure on the exchange rate, he predicted. "As things stand, we expect Pakistan's macro environment to remain stable and GDP growth to remain at 6.9 percent, driven by domestic consumption," he said.