"This time change seems for real, I might just go back soon," Ali told me as we waited for our Rogni naans to arrive. A Dubai based Pakistani lawyer from Lahore, he proudly flaunted his address five minutes into our meeting. He was residing in the world's tallest building, he said - the centerpiece of Dubai's dazzle - the Burj Khalifa after he had left Pakistan in search of a better life in the gulf a few years ago. Ali had generously, if commandingly invited me to share a meal with him in the famous Ravi restaurant is less upscale Al Satwa when he noticed that I was sitting alone. He even took the tab, refusing to let me pay for my vegetarian lunch when I told him I worked as a journalist in India, confirming though before he paid the bill that I shared his dislike for Arnab Goswami.
"I pay more rent than what you earn in 2 years" he said presumptuously as I offered my share. His guess about my remuneration was spot on and I didn't dare question how much flowed out of his bank account every month for rent. Ali was going back to Pakistan anyway, as stability was returning to his country and the economy was beginning a turn upward.
Pakistan recently came in for praise from the representatives of S&P and Moody's, the two prominent ratings agencies on whose ranking a country's borrowing costs hinge. Its Euro Bonds mopped up $2 billion and were touted as a spectacular success. International bodies like the IMF too have been impressed with Pakistan and the Nawaz Sharif government's resolve to reform its ailing economy. Press reports indicate that the IMF is likely to clear another tranche of 36-month $6.78 billion loans to the country.
Eight months after Sharif was sworn in as the Prime Minister, Pakistan's tattered finances are indeed on the mend. Growth hovered at 3%, inflation was in double digits, interest rates and budget deficits were high, investments had reduced to historic lows and foreign currency reserves were sharply falling when the transition happened says Senator Mohammed Ishaq Dar is Pakistan’s current Federal Minister for Finance. But less than a year later, after having hit the ground running to put in place a concerted action plan which included among other things a power policy and measures to improve tax collections, the picture has changed.
"The quarterly national accounts, first time released by the Pakistan Statistics Bureau, point to a GDP growth rate of five per cent in the first quarter of 2013-14, compared to 2.9 per cent in the first quarter of 2012-13. This early indicator of improved growth performance has been punctuated by other developments in the service and industrial sectors, reaffirming the brighter prospects of growth in the country. The large-scale manufacturing sector has posted a growth rate of 5.2 per cent during the July-to-November period in 2013-14 compared to 2.2 per cent for the same period last year...This growth is also reflected in better domestic sales tax collections, which rose by nearly 30 per cent during this period" Dar claims in an op-ed in the Khaleej Times.
Inflation is also reducing, exports are picking up, the government is borrowing less leading to a reduction in the budget deficit, and of course, the Karachi Stock Exchange is soaring. There is no doubt Pakistan is on the road to recovery.
Nearly 5 years after Home Minister Palaniappan Chidambaram made that famous statement about India being caught in a “ring of fire” (a Pakistan reeling under violence, a war torn Sri Lanka, a flood hit Bangladesh and a maoist controlled Nepal), it isn't merely Pakistan though that's showing some semblance of strength. The fire has been dousing gradually across India's various borders as its neighboring economies boom amid a protracted crisis of low growth, high inflation back home.
Sri Lanka's spectacular Chinese constructed $292 million airport expressway, is only among one of the island nation's showpieces for economic prosperity after decades of war. It opened last year connecting to the capital Colombo and was part of Lanka's heavy infrastructure building drive that began after the war ended in 2009. Its economy has been growing at a rate of 7.2 per cent in FY14, making it one of Asia’s fastest-growing markets. Its borrowing costs to have dropped to record lows according to the Financial Times and it has been identified by the French trade credit and insurance group Coface as one among 10 new emerging economies to watch out for. PIPCS - aka Peru, Philippines, Indonesia, Columbia and Sri Lanka is the acronym for this combine that's showing encouraging signs of economic acceleration.
Bangladesh also finds a mention in this group of ten along with Kenya, Tanzania, Zambia, and Ethiopia even though the business environment there continues to remain extremely difficult according to Coface. The World Bank recently cut its GDP growth forecast for Bangladesh to 5.4% due to political turmoil that engulfed the nation in the first half of the year, yet despite all odds the country has shown reasonable progress in the last 5 years.
"Its GDP has grown at an average of 6.3% per year, in the midst of one of the worst global downturns in recent times. It has achieved its 2015 UN Millennium Development Goals two years in advance. In 2013, it had brought the number of poor to less than 30% of its population — a target set for 2015 by the UN" wrote Subir Bhaumik a veteran journalist from Bangladesh in the Economic Times in September last year. What's more it has done better than India on most human development indices, and growth has been more inclusive in Bangladesh even as it has beat us in garment export shipments to the US in 2013 according to the EXIM bank.
Needless to say that all these neighbors remain exceptionally vulnerable still to a myriad risks right from instable governments to geo-political disruptions and as the World Bank recently noted domestic economic risks like instability in the banking sector, high inflation and big fiscal deficits. Keeping a vigil on these risks remains vital to sustaining the recovery say experts. But all the same there are lessons for India which is on the cusp of a new polity, from how these countries, seeped in misfortune 5 years ago have risen from the ashes.
Practical not conventional wisdom has driven Sri Lanka's rebuilding says Ajith Cabral, the governor of the Central Bank of Sri Lanka in a piece for the Forbes magazine, which meant a rapid action to tackle issues like rebuilding war-torn areas and infrastructure, which gave the economy a direct stimulus. Pakistan too used a similar approach, dealing with the electricity crisis for instance on a war footing. NGOs meanwhile were the big agencies for social development and change in Bangladesh as its government was seeped in turmoil.
India too faces an ambush of problems as it elects a new government, perhaps not as grave as the ones these nations did in 2009, but considerable ones nonetheless. And as Chidambaram makes way almost certainly for a new finance minister, leaving a torn economy to mend, Pakistan, Bangladesh and Sri Lanka might just be tempted to say today that they encircle a "ball of fire". That might be hyperbole after all, but it would be certainly interesting to watch what wisdom India's next government uses to get the country out of its current mess. There are lessons to be learnt from across our borders.
