Issue Brief on “Pakistan as Asia’s Emerging Economy: Prospects, Limitations and Policy Options”

It was Jim O’ Neil, the famous economist at Goldman Sachs Asset Management, who first identified Pakistan as one of the “Next-11 (N-11)” big emerging economies of the world after the BRICs.[1]  After a decade, his economic forecast is proving him right when many international rating agencies have started classifying the country as an emerging economy. The Bloomberg reports, “Pakistan’s Stock Market has been declared as Asia’s best performing stock market as KSE has showed a gain of 15%.”[2] American Stock Index Provider, Morgan Stanley Capital International (MSCI), included it among 10 most   emerging economies of the world. And also noted that KSE-100 share index has been performing the best among all Asian markets, therefore, the agency rated it as world’s fifth best market. Another American international ratings agency, Atlantic Media Company (AMC), has ranked it as a comparatively stronger economy of South Asia, bound to flourish in years ahead.[3]

An emerging market, generally, is placed between a developed market (such as the UK, US, European Union and Japan) and a frontier market (which is less developed than an emerging markets but its criteria and indicators differ. MSCI classifies Pakistan as an emerging economy by accessing a number of its quoted companies of a certain size (the proportion shares available to an ordinary investors to buy), and openness of its market to foreign capital and investment. Other indicators are fast economic growth, high GDP rate, openness to global capital and investment, human capital, and bright prospects of their economic and business environment. AMC categorized Pakistan as an emerging economy due to its environment that is conducive for business and economics, and continuity of political stability. AMC is of the view that the government’s investment in infrastructure and political stability has accelerated the country’s domestic growth product (GDP).  It acknowledges that Pakistan is surfacing as a ‘market leader’ and its current economic conditions are attracting foreign investments.[4]

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