Pakistan’s financial indicators are improving, with its stock market climbing, foreign reserves reaching record levels and credit ratings getting better. But those gains have yet to make the country’s broader economic recovery convincing.
High energy costs and the war with Iran have contributed to rising inflation. Renewed militancy in Pakistan’s border provinces is also increasing risks for investors.
Last week, the central bank raised its benchmark interest rate by 50 basis points to 12%. It said the inflation outlook had worsened as oil prices exceeded $100 a barrel and wheat prices rose. On Monday, the government reported that inflation remained well above the central bank’s target in the previous month.
Sources: Bloomberg Markets.