Economy on the mend

The unprecedented surge in Pakistan’s capital market likely reflects deeper, more complex underlying factors beyond surface-level investor optimism. The country’s benchmark KSE-100 index clocked at 94,763 when the market closed last Friday, up from 76,742 on November 15, 2023, an impressive gain of 18,021 points in one year. This historic surge occurred despite Pakistan’s low GDP growth rate of just 2.5 per cent in FY24 and expectations of hardly 1pc higher 3.5pc growth rate in FY25 if things go as planned, the country’s close brush with default last year, persistently low saving and investment rates, minimal productivity in agriculture and industry, lagging economic and social indicators, and heavy reliance on bilateral and multiple donors for financial stability. Bankers, brokers, mutual funds managers, and securities firms like to portray an optimistic picture, viewing the positive market sentiment as an early signal of a high GDP growth trajectory ahead.