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Pak-Rupee Makes Record Low

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The Pakistani rupee fell to a fresh record low on Saturday on negative sentiment about the country's economic outlook, as well as the deteriorating security situation in Pakistan's financial hub Karachi. The rupee closed at 86.95/99 to the dollar -- its weakest ever closing -- down from the previous record low of 86.85/90 on Friday. Dealers said they expect the currency to remain under pressure, as dollar payments are typically higher in July and August because of stronger oil demand and debt payments.

'The rupee was traded as high as 87 against the dollar,' said a dealer at a local bank. 'There were no payments today but there are some due on Monday so there was some position building plus the sentiment is still very weak.' Stalled payments from a bailout program by the International Monetary Fund (IMF) is also negatively impacting the rupee.

The IMF has criticized the Pakistan government for its patchy implementation of fiscal reforms, and has held back the sixth tranche of an $11 billion bailout program since August last year.
IMF and Pakistan officials were due to meet last month, but the meeting has been delayed and no new date has been announced.

Dealers said increased remittances from Pakistanis working abroad had supported the rupee and shielded the currency from a sharp fall in recent weeks, but increased dollar demand over the last week has pushed the rupee lower. According to official data, remittances rose 38.57 percent to $1.1 billion in the first month of 2011/12 fiscal year, compared with $791.18 million in the same period last year.

Dealers also said there were fears of portfolio inflows, which was driving down the sentiment. Dealers said the security situation of Karachi was also weighing down the rupee as at least 65 people have died in the violence which erupted on Wednesday, according to police officials. The commercial hub of Pakistan has been gripped by political and ethnic violence as well as gang wars in recent months.

posted @ 12:14 PM, ,

Online Pharmacy

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These days there are number of spam emails offering and selling medicines or drugs which are designed to steal your credit card details or to download damaging files onto your computer. They are offering medicine at very cheap prices or without the need for a prescription from a doctor. These scams can cause both financial and health problems. Even if you actually do receive the products that you order, there is no guarantee that they are the real thing. In some cases, the medicines or other products may even damage your health.

Remember that there is legitimate online pharmacy without prescription. These businesses will have their full contact details listed and will also require a valid prescription before they send out any medicine that requires one.

They have compiled some informative material from professional sources regarding purchasing prescription online pharmacy , which they know clients will find useful. While they always recommend that a client consult with their physician prior to buying prescription medications online, they can answer any questions that may fall within our professional scope as the law permits regarding sales and service. They would like to invite you to continue to our client support page for more detailed information. You can also contact us with questions, concerns or issues regarding your online purchases. They are pleased that you have considered us pharmacy online no prescription and want to ensure only the finest service available on the web.

posted @ 10:43 AM, ,

Sharing economy

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This article appeared in Profit, Pakistan Today, August 10, 2011 issue

The concept of sharing economy is as old as society itself. Economic model based on bartering, lending, trading, renting, gifting, and swapping (commonly called collaborative consumption) has always been present in all civilization in one form or the other. Only the ongoing boom of collaborative web technologies has accelerated sharing on the pace that was never possible before. The growth is more evident online.

Loosely defined, sharing economy is a business model in which shared goods or services are distributed via a market place to a community of users. The basic idea is to better utilize existing assets. Connected population can better participate in organized sharing of goods that would otherwise sit unutilized. Many of us are probably already participating in this fast growing trend. Anyone who has created software for download free or posted information online for users to benefit is already participating in the trend. Those who are using online marketplaces to recycle physical goods creating less of a need to produce new products or are facilitating an economical and convenient ways of sharing are also aiding collaborative consumption.

Initially, sharing economy concerns followed business-to-consumer market strategies. Over time, peer-to-peer models are mushrooming. Peer-to-peer models are much more capital efficient than their business to consumer counterparts because they do not require major capital investment to acquire assets. Instead, they rely on a community to supply them, typically in exchange for a revenue share of the transaction.

Growing fast, sharing economy stands at one of those interesting points in time where no one knows how big it might grow. Social technologies have already changed the concept of a community and consumers’ behavior. What in the past was about ownership is now about access.Traditionally, the growth of conventional economy has always based upon larger inputs from finite resources. That is not sustainable long-term solution. Still, armed with theories that disregard physical limits, conventional economy has been successful in creating incredible wealth and technological progress, notwithstanding the depletion in existing resources to near exhaustion. Almost all resources are running out, leaving little for generations to come. Environmental hazards that come with exploiting resources, like climate change, ecosystem devastation, and biodiversity loss.

That is why ecologists were the first to support sharing economy as a phenomenon. Ecologists and environmentalist view economic fundamentals by making a distinction between growth and sustainable development. While growth can be defined as an increase in output, sustainable development means increasing the quality of human well-being by a given output. By focusing on the latter, ecologists believe that our society can progress without destroying the ecosystem that sustains it.

Sharing and renting more stuff means producing and wasting less stuff, which in turn means producing less and that is good for the planet we live on. In addition to this green element, best thing is that collaborative consumption has new opportunities for entrepreneurs to make money. As per careful estimate, sharing economy as a whole is a $110 billion plus market and it is growing as a perfect fit for an cyber lifestyle in which “digital natives” (those born after 1980 and are now growing up during the digital revolution) can participate with trust. One can see the growth in the rise of big businesses like car rentals and media companies whose millions of subscribers pay a fee to share a car part time or download DVDs they want. In addition to the so many successful examples, a huge new opportunity is already driving new businesses and renewing old ones.

Let us take a look at human factor in collaborative consumption. Collaboration is human nature in the first place. Digital natives have discovered that consumption and capitalism are not necessarily the doors to happiness. They are connected; they know that the world is now a group of interest based communities ripe for collaboration. The tools the digital generation embraces and the platforms that are coming up every day are making it possible to collaborate more.

Sharing is first of all a human experience, probably as old as our existence, but after the rise of rampant consumption, “sharing with” is the new humanized experience.

Local market scouting reveals that all businesses from bartering, lending, trading, renting, gifting, to swapping are already running in Pakistan since pre internet era still working the old ways. They need to adjust to the age of collaborative web technologies. The bottom of the pyramid in Pakistan is much wider than most people realize. Collaborative consumption phenomenon that promises austerity will sure find great demand.

Is collaborative consumption really the answer to rampant consumerism, a change in the air? While the exchange economy may have been appropriate for the industrial and post industrial age, the sharing economy is coming back as we proceed through the digital age and yes, it can change so many things.

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posted @ 1:07 PM, ,

Made in Pakistan

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Pakistan stands out in the world when it comes to cotton products. Here cotton is the best, manufacturing process is cost effective and the whole chain is business friendly. Which is why users from all over look upto Pakistani concerns for their needs?

At Product Impex we offer cotton wears from aprons to towel, sports socks, work wear and other cotton mix synthetic material swimwear. Out whole process is simple. Contact us, tell us what you need and will deliver the same, under your own label if you want. We pride in offering you your own brand.

Have a look at our site and see what we are offering and how. Just tell us what you want and let us work together.

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posted @ 1:06 PM, ,

Monetary Policy, July 2011 - At A Glance

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1. A relative decline in average CPI inflation compared to earlier projections and a gradual buildup of foreign exchange reserves provide a modicum of macroeconomic stability as the economy begins a new fiscal year. These developments appear more pronounced in the backdrop of devastating floods of early FY11 and a significant shortfall in external financial inflows. While the containment of government borrowings from SBP in H2-FY11 played its part in relatively improving the inflation outlook, a substantial increase in export prices and steadily rising remittances facilitated the reserve accumulation. A cumulative increase of 150 basis points in SBP’s policy rate during H1-FY11 and a proactive management of financial markets also helped in realizing these incremental gains.

2. A lower than projected inflation does not provide an enduring source of comfort for SBP as it continues to show a high degree of persistence at an elevated level. The 12-month moving average of CPI inflation was 13.9 percent in June 2011, exactly the same level observed in every subsequent month since December 2010, and 4.4 percentage points higher than the target for FY11. This level of inflation is not limited to the prices of few items and is in fact quite broad based, indicating that expectations of inflation are fairly entrenched in the economy. Thus, a meaningful reduction in inflation would require consistent and credible implementation of monetary and fiscal policies.

3. Acknowledging the persistence of inflation, the government has announced an inflation target of 12 percent for FY12. The government has also provided in the Medium Term Budgetary Framework (MTBF) a desired path of inflation of 9.5 percent and 8 percent for the subsequent two years. Conditional upon factors such as adjustments in the administered prices of electricity and oil and a projected broad money (M2) growth of 15 to 16 percent SBP’s forecast of average inflation ranges between 11 and 12 percent during FY12.

4. A close inspection of the overall expansion in monetary aggregates and their changing composition is important to understand both the moderate decline and persistence of inflation. For instance, reserve money grew by 17.1 percent in FY11 with 82 percent of the expansion coming from an increase in the Net foreign Assets (NFA) of SBP. Accumulation in NFA is a reflection of the external current account surplus and build-up of reserves by the SBP. A surplus in the external current account, in turn, is an indication of somewhat restrained aggregate demand in the economy and therefore relative stability in inflation, albeit at a high level. Retirement of government borrowings from SBP towards the end of both the third and fourth quarter of FY11 has also been helpful in improving the inflation outlook.

5. The government borrowing from scheduled banks, however, has increased substantially. It grew by 74.5 percent in FY11 and contributed 65 percent to the 15.9 percent growth in broad money (M2). The growth in private sector credit, on the other hand, was only 4 percent with negligible demand for fixed investment. These monetary trends show that the decline in aggregate demand is less than desirable and expansion in productive capacity of the economy remains weak. Both these factors help understand the persistence of inflation. The falling productivity due to severe energy shortages and deteriorating law and order conditions together with unanticipated and sporadic adjustments in the administered prices are also adding inertia to inflation.

6. The borrowing needs of the government from the scheduled banks were mostly met through short term instruments. This has increased the rollover requirements substantially and has complicated liquidity management. Apart from mitigating the resulting volatility in the money market overnight repo rate and keeping it consistent with the monetary policy stance, SBP’s liquidity operations had to strike a difficult balance among multiple and competing considerations. These include stability of the payments system, adequate availability of liquidity in the market, and build up of foreign exchange reserves.

7. The underlying reasons of growing government borrowings are structural and not specific to FY11 though it must be acknowledged that FY11 was a difficult year given floods and other pressing spending needs. The consolidated fiscal data has not been released, however, provisional estimates from the financing side indicate that the fiscal deficit in FY11 may have reached close to Rs1127 billion or 6.2 percent of GDP. Excluding the one-off payment of Rs120 billion to partially settle the circular debt in the energy sector, the fiscal deficit in FY11 comes down to 5.6 percent of GDP.

8. The main structural weaknesses causing this high level of fiscal deficit and a rise in total debt are low tax to GDP ratio and rigid current expenditures. While exemptions and ineffective taxation of major parts of income generating sectors of the economy are limiting the revenue generation capacity, continued provision of financial support to the loss making Public Sector Enterprises (PSEs) and untargeted subsidies are keeping the current expenditures under pressure. Consequently, the tax to GDP ratio remains low, 8.6 percent in FY11, and any fiscal adjustment inevitably results in cuts in the development expenditures, which is not desirable given the infrastructure needs of the economy.

9. These considerations underscore the need to accelerate the implementation of fiscal reforms currently being considered by the government. A path of fiscal deficit in the next three fiscal years has been provided in the Medium Term Budgetary Framework (MTBF), which shows a budget deficit target of 4 percent for FY12. Moreover, the government is planning to reduce the revenue deficit to zero in FY12 with a projected surplus in the following two years. This assumes an ambitious increase in tax collection by the Federal Board of Revenue (FBR). An effective implementation of fiscal reforms, especially those related to broadening of the tax base, and better coordination with the provinces are urgently required to implement this plan.

10. Unlike fiscal accounts the position of the external current account improved considerably in FY11 and contrary to earlier projections a surplus of $542 million has been realized. A significant and unexpected growth of 29.4 percent in exports and a robust growth in workers’ remittances, which now stand at $11.2 billion, are the primary factors responsible for this improvement. Fragile global economic conditions and dominance of price effect in both exports and imports, which was more pronounced in H2-FY11, has increased exposure of the economy to movements in international commodity prices.

11. Incorporating the recent declining trend in international cotton prices and likely continuation of international oil prices around $100 per barrel, projected growth rate of exports is 6 to 7 percent and that of imports is 10.5 to 11.5 percent. The external current account is expected to show a modest deficit of 0.8 percent of GDP in FY12. Given an increase in debt obligations and continued suspension of IMF’s Stand-By Arrangement (SBA) financing even a small external current account deficit could pose challenges in terms of maintaining an upward trajectory of SBP’s foreign exchange reserves.

12. The main risk in external accounts emanates from the declining capital and financial flows, which have dropped to $1.8 billion in FY11 from $5.3 billion in FY10. The perceived high country risk, relative to other emerging market economies, is the main factor underlying the reluctance of private foreign investors to invest in the country. The delays in implementation of economic reforms, on the other hand, resulted in shortfalls in estimated foreign loans. Nonetheless, by end-June 2011, SBP’s liquid foreign exchange reserves have increased to $14.8 billion from $13.0 billion at end-June 2010. A reflection of an improved overall external position can also be seen in a relatively stable exchange rate; Pak rupee marginally depreciated by 0.5 percent against the US dollar in FY11.

13. The provisional National Income Accounts, however, do not share the positive aspects of external accounts. The devastating floods at the start of FY11 were a serious setback for economic growth in the economy already beset by continuing energy shortages and deteriorating law and order conditions. As a result, real GDP growth of 2.4 percent fell short of the target by more than 2 percentage points. The main casualty was the real private investment expenditures. The gross fixed capital formation by the private sector contracted by 3.1 percent, leading to a decline in total gross investment to 13.4 percent of GDP; the lowest level since FY74. However, due to strong growth in real consumption expenditures, aggregate domestic demand grew by 5.9 percent.

14. At the same time, national savings have increased to 13.8 percent of GDP, mainly due to net factor income from abroad. Consequently, the gap between national savings and investment as a percent of GDP has turned marginally positive. Since this positive gap is mostly due to falling investment, it cannot be considered as an encouraging development from the perspective of reviving economic activities and sustaining high growth over the medium term.

15. Against this backdrop, SBP has decided to reduce the policy rate by 50 basis points to 13.5 percent effective 1st August 2011. The key parameter in this assessment is the outlook of inflation that indicates that average inflation in FY12 is expected to remain in line with the announced target. No adjustment in the interest rate would have entailed further tightening of monetary policy in real terms, which is not warranted given the decline in private investment. Moreover, despite fiscal slippages, the government has adhered to restricting the stock of its borrowings from SBP to Rs1155 billion (on cash basis). In fact, the government retired these borrowings compared to both the end-June 2010 level as well as the mutually agreed limit of end-September 2010 level. The government has also expressed its commitment to continue with a stance of zero borrowings from SBP in yearly flow terms in FY12, which bodes well for anchoring inflation expectations. However, the developments related to expected financial inflows and pattern of government borrowings from scheduled banks will need to be monitored closely to assess potential risks for macroeconomic stability.

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posted @ 4:28 PM, ,

Weight Loss Pills

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posted @ 1:01 PM, ,

Light Within

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