economy decline

As the PPP and PML leaderships continue their political posturing, the larger story is the massive loss of confidence by business/investment community in Pakistan. It is worrying to see a sudden halt to foreign investments and the flight of capital by Pakistani investors to investments elsewhere in the world.
State Bank has raised interest rates from 10% to 12.5%, the rupee is in free fall, the dollar reserves are disappearing and both S&P and Moody’s have cut Pakistan’s credit ratings.
KSE 100 index has lost 2992 pts during May 2008 starting at 15122 & ending at 12130. The index has lost 879 pts during the week ended May 30th , 2008, standing at a nine month low.

Unfortunately, it takes time and serious effort to create confidence in markets and economy. But it is very quick and easy to destroy such confidence by ill-conceived, impromptu statements. Zardari's comments such as Pakistani economy heading toward a "meltdown" add fuel to the fire and weaken confidence in Pakistan's economy and drive away investors. What Pakistan needs more than anything else is a sense that the leadership understands the issues and working seriously in a focused manner to resolve the economic issues? They need some sense of political stability and predictability.