Trump’s win unlikely to portend bad omen for Pakistan

LAHORE/KARACHI: Pakistan’s link with the United States weakened over the past decade and therefore the Donald Trump’s victory would have a little impact on the country’s economy, an industry official said on Wednesday. 

“Direct implications of the Trump rule on our economy will be minimal,” said Iftikhar Ali Malik, vice president of South Asian Association for Regional Cooperation Chamber of Commerce and Industry. “The protectionist policies that the new winner has been propagating over the period will have global repercussions. But, they will have a minimal impact on Pakistan that is not fully integrated with the global trade and industry.”

The chamber official said the China-Pakistan Economic Corridor initiative was launched at the right time that would increase the country’s external position.  He said the developed markets have reached the saturation point and there are more opportunities in developing economies, which Pakistan should exploit to ward off possible negative fallouts of Trump policies.

Economist Naveed Anwar Khan agreed that Pakistan’s economy was dependent on US a decade back.  Khan said the North American used to be the country’s largest single trading partner and the main source of workers’ remittances. 

Topline Securities Limited, in a report, said the share of exports to US in Pakistan’s total exports fell to 15 percent from 25 percent in the last 10 years, while the share of imports decreased to 3.6 percent from 4.5 percent. 

Likewise remittances from US, which accounted for 25 percent of the total inflows, came down to 15 percent.  Pakistan’s bilateral trade with China and Middle East, however, are growing.

Chinese imports to Pakistan account for more than 25 percent of the total. Now, the major portion of the remittances comes from Middle East, followed by the European Union. 

Khan said any move by the US president to unduly protect its industries and services will be reciprocated by other developed economies with similar protectionist actions. “That could hurt Pakistan as well as other developing economies.”

Zubair Motiwala, chairman of Council of All Pakistan Textile Associations foresees a negative impact on textile exports. 

“There are some concerns among the textile exporters,” Motiwala said. “The US is the single largest importer of Pakistani textile goods. The country exports around $4.5 billion to $5 billion worth of goods to America.”  Abdullah Zaki, president of All Pakistan Soap Manufacturers Association said the government has to increase its efforts to gain preferred economy status from US.  “We have always seen adjustment in policies,” Zaki said.  Naseem Usman, chairman at Karachi Cotton Exchange, said the business community is concerned. “Not only in Pakistan, people across the world are a bit cautious,” he said. “We hope the new administration will improve trade relations with Pakistan in order to support peace in the region.”

Abullah Shah Bokhari, chief executive at Enrichers (Pvt.) Ltd. said global stocks fell in a knee-jerk reaction to the Trump win to have soon recovered. 

Bokhari, whose commodity trading firm is registered with the Pakistan Mercantile Exchange said local shares also lost glitter early in the morning, but started recovering later in the day.  “Pakistani market reacted as same as it did after Brexit (UK exit from European Union) vote but in the next few months attained the new heights,” he added. “Our bourse is not globally connected, and moves up or down on the performance of listed companies.” 

Bokhari observed that gold prices jumped four percent – a very high increase within a few hours by gold standards. “Gold is a hedge against the political uncertainty.”

Abdul Basit, president of the Lahore Chamber of Commerce and Industry (LCCI) said as far as Pakistan is concerned the policies of Barrack Obama regime were not in favour of Pakistan. “Hillary Clinton would have pursued the same policies,” Basit said. “We have to wait for the extent to which Trump would go to reshape the policies in accordance with the framework he outlined during his election campaign.” 

He said the victory speech was extremely mild as compared to his vitriolic rhetoric in the past. “Historically, Republican presidents have tilted more towards Pakistan than the Democrats,” he added.   A leading chemical manufacturer Anjum Nisar doesn’t see much of an impact.  “Pakistan’s economy is mired in conflicting economic policies,” said Nisar. “If we address the flaws in our policies and provide a level-playing field to all, there will be no negative Trump effect on our economy.”