Pakistan riskier than Iraq and DRC

Confidence in Pakistan’s risk outlook among ECR’s experts has deteriorated this year to the extent the sovereign has fallen below Iraq and the Democratic Republic of Congo in the global rankings.

Pakistan’s score of 27.0 is three points lower compared with the start of the year and 5.3 points down on a year-on-year basis.

The sovereign’s political risk assessment has fallen particularly sharply against the backdrop of deteriorating relations with the US, a weak domestic security situation and political problems related to a Supreme Court ruling over the ineligibility of the prime minister.

It is the sixth worst performer for political risk during the past six months, out of the 186 countries included in ECR’s survey.

Scores for corruption, institutional risk, and the regulatory and policy environment have fallen since January, and confidence in all other political sub-factors – government non-payments/non-repatriation, information access/transparency, and government stability – has also waned since Q1 2012.

Plus, elements of economic risk have increased, including the economic-GNP outlook.

As Amjad Bashir, chief economist at the Lahore Chamber of Commerce & Industry, and one of ECR’s Pakistan experts, points out (Macroeconomic stability and growth: building competitiveness in Pakistan:

“Pakistan has the wherewithal to achieve high long-term growth.

“[However, the] revival of growth and regaining of lost competitiveness will greatly depend on how Pakistan tackles its chronic macroeconomic instability primarily rooted in fiscal slippages, energy crisis and low trade orientation.”

This article was originally published by Euromoney country risk.