Media Type

Talk

Publication Date

1-1-2008

Description

Bismillah. Thank you very much for inviting me here to share my thoughts with you. It's nice to see such a large gathering of investors and this is a very good opportunity for me to put a different spin on the air of despondency and almost a state of depression which I came across the entire country and I think we have to put this whole thing in perspective. Let me start by saying the economic conditions of any country are determined not by one single set of variables, it is an interplay of a number of complex inter-related variables and unless you recognize this; you might be barking up the wrong tree. For example it is the initial resource endowment of a country, natural, physical and human. What is the capital and resource base on which a country can build its economic edifice? Second is: what are the non-economic factors which are affecting the economy at a particular point of time? Because the non-economic factors: the political, the social stability do play an important role. The markets work on sentiments; markets work on trust; markets work on social capital; and if these elements are missing, not because of the economic policies themselves, but for non-economic factors, those have to be taken into considerations. The third is: we're all becoming integrated into the global economy; therefore the external economic environment is very critical determinant of what happens in the local space. And that is also determinant of the direction in which you are going and the space which you're able to maneuver. And the fourth factor which combines all this is what is the quality of economic management and the governance structure of a country? When all other variables are turning difficult or are unfavorable, or are ridden with uncertainty, somebody has to steer the ship of the economy with very strong hands in order to counter these tendencies. But if you look at the conditions which prevailed in Pakistan, during the last 18 months or so, you had oil prices going up from US $50 to US $140, the commodity prices, the wheat prices almost doubling in a span of one year to 18 months at a speed which has not been known in the recent history; you have a situation where you're losing money out of your own pocket in the war against terrorism and all this talk about US aid coming in after September 11 and bailing out Pakistan; is a total bunker!

Notes

Speech delivered at the BMA Funds Investor Forum. The publication date is estimated. IH0213

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