Pakistan Country Forecast Highlights

On Shaky Ground

• An already gloomy outlook for political stability has worsened markedly since heavy monsoon rains caused massive flood disaster, and the PPP regime’s weak response has seriously undermined public trust…
• Before the floods, President Asif Ali Zardari’s public approval ratings had already amid corruption scandals…
• Since the floods, the main opposition PML-N has been heavily criticized for its handling of the crisis in Punjab, where Shahbaz Sharif, the brother of PML-N leader Nawaz Sharif, heads the government…
• Religious fundamentalists have taken a leading role in delivering aid to flood-ravaged areas, building goodwill among local inhabitants, making extremist challenges possible as the PPP regime tries to fulfill its obligation to stem the international threat posed by Pakistan-based terrorist cells…
• The PPP’s only realistic hope of regaining credibility among the electorate lies in the ability of Prime Minister Yousaf Raza Gillani’s government to obtain the billions of dollars in foreign assistance…

Outlook for the Future

• External aid will be essential to preventing the flood-related crisis from triggering a collapse of internal order, and the key in that regard will be winning the support of the IMF…
• The military leader, Gen. Ashfaq Kayani, is unlikely to stand idly by if domestic stability were seriously compromised, and his predecessor, former President Musharraf, has launched an effort to build a third political force to challenge the PPP and the PML-N for political dominance…
• Over the medium term, economic performance will reflect the level of political stability, which will be a key factor in determining whether Pakistan continues to enjoy access to international financial support…