Investor confidence is at a low in Pakistan owing to political instability which is leading to frequent changes in government policies, thus creating uncertainty for businesses and investors. A general election is due this year and hopefully markets will gain some confidence after that.
This is a challenging time in Pakistan, with inflation recorded at 18.5% in June and interest rates at around 22%. This situation is leading to slow economic growth. Businesses are confronted with increased production costs owing to the devaluation of the rupee and are facing problems in making sales of their finished products.
Pakistan and the International Monetary Fund have reached an agreement which has resolved the foreign reserves deficit in the country. Import restrictions have started to loosen up - a positive development for domestic manufacturers - and more non-ferrous scrap is expected to head into the Pakistani market.