Boston, MA -- (SBWIRE) -- 07/26/2013 -- Steady Growth But Beware Downside Risks

Our immediate economic outlook for Pakistan remains broadly unchanged on our last quarterly shipping report. Despite ongoing structural problems such as the long-running energy crisis, a poor security situation and poor fiscal management, the country has been seeing a gradual improvement in activity levels, largely driven by a supportive monetary policy and an improvement in private sector credit. We continue to expect GDP growth of 4% in fiscal year (FY) 2012/13 (July to June), which would mark the strongest growth in six years, albeit nowhere near the mid-to-high single-digit growth rates achieved prior to the 2008 global economic crisis. For FY2013/14 we are forecasting the same 4% level of expansion. This prediction is, of course, highly sensitive to political risk, particularly with the Pakistan elections which were held in May 2013. There is also a significant risk linked to a potential balance of payments crisis outlined below.

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Looking at the port sector, we expect volume growth to be positive but with some fairly wide variations. The crisis in the eurozone, Pakistan's most important trading partner, remains a key factor. BMI calculates that the real value of total trade (imports + exports) fell by 1.7% in 2011/12, but is set to recover by 3.5% in 2012/13 and will grow by 3.9% in 2013/14. We think regional demand from neighbouring countries using Pakistani ports as a gateway will provide a little upside potential, but this will not yet be significant.

Headline Industry Data

- 2012/13 tonnage throughput at the Port of Karachi is forecast by BMI to grow by 7.3% to 40.651mn tonnes; growth to slow to 1.6% in 2013/14.
- 2012/13 container throughput growth at the Port of Karachi forecast to increase by 2.2% to 1.531mn 20- foot equivalent units (TEUs); growth in 2013/14 to rise slightly to 2.4%.
- 2012/13 tonnage throughput at the Port of Muhammad Bin Qasim forecast to grow by 5.2% to 25.277mn tonnes; growth in 2013/14 to ease to 3.0%.
- 2012/13 container throughput at the Port of Muhammad Bin Qasim forecast to grow by 4.2% to 762,744 TEUs; growth in 2013/14 to rise to 5.4%.
- Pakistan's total trade forecast to see real growth of 3.5% in 2012/13, rising to 3.9% in 2013/14.

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