Karachi: Financial turmoil evokes 2008 comparison
According to Standard Capital, Stocks are plummeting. The economy is slowing. Politicians are scrambling to find solutions but are mired in disagreement. Many Americans are wondering whether they are in for a repeat of the financial crisis of 2008. The answer is a matter of fierce debate among economists and market experts. Many say the risks are lower today — at least in terms of an immediate crisis — because the financial system over all is healthier and there are fewer hidden problems. But the experts add that there are reasons to worry, and they do not rule out a quick downward spiral if politicians in the United States and in Europe cannot calm investors by addressing fundamental financial threats. Most of the attention so far has been focused on volatility in stocks, with investors spooked by three heart‐stopping declines in the last five trading days — including Wednesday’s 4.6% drop in the Dow Jones industrial average. But the bigger concern of many financiers and government officials was signs of stress on Wednesday in European credit markets, which are essential to financing the day‐to‐day operations of banks and companies there.
Remittances maintained its pace rising 39% to $1.1b in July
The pace of increase in remittances showed no signs of easing as Pakistanis working abroad sent home US$1.1bn in July, which was higher by 38.57% or US$305.13mn when compared with US$791.18mn received during the same period last year, reveals data released by the State Bank of Pakistan (SBP). In FY11, remittances surged 26% to a record level of US$11.2bn. (Tribune) This may continue to rise in the month of August on account of Ramadan (expatriate sending more money to their families for the EID festival) and as well as FY12 figures may glow further as a result of efficient initiative by Pakistan Remittance Initiative (PRI) which helped boosting remittances figures by providing a formal channel. Moreover, recent riots in London may further add to these as Pakistani community living abroad may take cautious steps to repatriate their personal wealth. (Analyst: Zain Saleem)
Textile export to fall
Weak demand and higher output has depressed world cotton prices and will cost Pakistan more than US$1bn in key textile exports for the FY12, despite an expected bumper crop, industry officials said on Wednesday. Textiles and cotton account for nearly 60% of Pakistan’s exports and are a major source of foreign exchange for its fragile economy, kept afloat by an US$11bn International Monetary Fund loan secured in 2008. Despite severe losses to the cotton crop by 2010′s floods, the value of Pakistan’s textile exports in FY11 rose 35% to US$13.80bn from US$10.22bn the previous year, mainly because of globally high cotton prices. Pakistani manufacturers of ready‐made garments, valued at US$1.77bn in exports last year, fear exports will drop further, citing a significant fall in Christmas demand because of cotton price volatility and Pakistan’s chronic energy crisis making foreign buyers reluctant to place orders. Cotton prices, which doubled and peaked at US$2.27 per pound in the 1QFY11 on tight supplies and robust demand, have since fallen to less than half that level, where they remain.