Economic costs of political unrest

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It is hard to overstate what a dramatic impact the current political uncertainty has on business leaders, and the consequences could – if not addressed immediately – be disastrous for the economy. The growing political ambivalence further fueled by the supreme court’s decision to oust the democratically elected Prime Minister for technical charges of corruption has once again pushed the struggling economy to the edge of massive imbalance. Pakistan’s economy is very reactive to the political situation and any unrest in this sector can potentially harm and possibly reverse the economic gains made by the steady growth of economic indicators in last four years, mainly due to the calm in political arena. All the painstaking work that had been done for years to put the economy on an optimistic trajectory was painfully brought down in one fell swoop. By now, it is abundantly clear that few, if any, know how far these declines will go, and whether or not the peaks that the index hit this winter will ever be scaled again.

Business people and economic analysts are united in their warning that the current political stalemate will have far-reaching consequences on the economy which is expected to grow six per cent in the 2017/2018 financial year. Business community is very sensitive to the law and order situation in the country. Yet the current political heat seems certain to get hotter as political protagonists adopt a hardline stance. if political rhetoric remains heated, things are bound to take a disturbing proportion. Global rating agency Standard & Poor’s (S&P) has since warned that the tense political environment is adding undue pressure on the country’s sovereign rating. Sovereign ratings are used by international investors as a guide to the level of risk when pumping money into a country, meaning that a good rating eases the access and terms when a country is borrowing from the global markets. there is no doubt that political situation of the country is also to be blamed for the volatile and unpredictable behavior of markets lately.

This necessarily does not mean that accountability is bad for the economy and corrupt elements should be tolerated to keep it stable but the economic structure should be made independent of political situations. The good thing in all this mess is that all parties have accepted the court’s verdict on Panama papers case whether by celebrations or quietly murmuring about it. Now a peaceful transition of power should be initiated as soon as possible and no further agitation should be accepted from any side. The economy has already suffered much due to political upheavals and adventures. Progress on CPEC and development projects should must continue at the same pace no matter who is running the show in the capital. This is the only way to make the economy favorable for business and investor community.

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