Kunwar Khuldune Shahid

Pakistan’s lockdown gamble appears to have paid off

Pakistan's prime minister Imran Khan (Getty images)

Pakistan’s stock exchange isn’t typically seen as one of the world’s best, but in recent weeks it has outperformed almost every other rival market. In terms of weekly profit, the Pakistan stock market was among the world’s top-performing last week. In August, it was Asia’s best and the fourth-best globally. For many, this has been a surprising turnaround in a country that registered a nine-year low growth rate only 12 months ago. Not to mention that the Pakistan stock exchange crashed with much of the rest of the global market when Covid-19 hit in March. So what explains Pakistan’s success?

It is no coincidence that the stock market highs have come in light of Pakistan transforming into a rare and perhaps unlikely Covid-19 success story, having largely curtailed the spread of the virus in a region still reeling with the impact of the pandemic. But while Pakistan’s apparent triumph over Covid-19 still remains a healthcare mystery, the roots of the stock market’s rally are more discernible. And it is another story that Imran Khan’s government will happily crow about after two tumultuous years in power.

Taking over in August 2018, when a financial crisis was already brewing in Pakistan, Khan oversaw a woeful situation in which the country’s economy was dragged down to new nadirs as his government procrastinated over the inevitable International Monetary Fund deal. The bailout for the country in July 2019 practically handed over the economy to the IMF repeating yet another – 13th to be precise – cycle of imposed fiscal reforms. This has resulted in tangible improvement in the macroeconomic outlook since, even if the poorest are still no better off.

The improving economic numbers have been epitomised by the Pakistani rupee largely remaining stable over the past year, after losing more than half of its value against the US dollar in the previous 18 months.

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