Karachi violence a big blow to economy AFP/Karachi
Source: gulf times
A wave of political and sectarian violence sweeping Karachi threatens heavy financial losses in the country’s economic hub, where analysts fear Islamists are bent on fanning maximum instability.
Bomb attacks targeting Shias have killed 76 people in six weeks, devastating riots and a surge in political shootings have sparked fears that after relative quiet, Karachi is returning to the eye of the storm.
Pakistan’s richest city has been spared the worst of a two-year Islamist bombing campaign but is plagued by crime and kidnappings, which some analysts say militant groups use to bankroll campaigns in the northwest and Afghanistan.
“Karachi accounts for nearly 45% of Pakistan’s GDP,” independent economist AB Shahid said.
“It translates into roughly Rs15bn ($180mn) per day and tax revenues of Rs1bn per day,” he said.
The city is a national headquarters for industry and the service sector, a bustling port city on the Arabian sea with a teeming population of 16mn.
“If the collapse of Pakistan’s economy is the intention of its adversaries, then the easiest route to follow is ensure that Karachi’s activity comes to a complete standstill,” said Shahid.
Pakistan recorded 2% gross domestic product growth last fiscal year, which ended on June 30, the worst-recorded economic growth since the financial year 1997-1998.
Ashfaq Hasan Khan, once economic advisor to former president Pervez Musharraf, said violence in Karachi was aimed at crippling Pakistan’s economy.
“Karachi has been spared of terrorism and violence for a long time and was contributing massively to the country’s weak economy, but now the plotters want to completely cripple Pakistan’s economy by attacking our port city,” he said.
It is largely impossible to calculate exact losses caused by violence and closures, such as for mourning after December 28 and February 5 bomb attacks on Shias.
The shutdown of the city Saturday, when thousands attended funerals for the 33 people killed on February 5, cost Rs12 to 15bn, he estimated.
Officials say growing security concerns and targeted killings, which have exposed political tensions, tarnish Karachi’s attraction for foreign investors.
“We are painstakingly convincing foreign investors to come here and many of them do agree but one incident forces them to pull back,” Zubair Motiwala, an investment adviser in the provincial government, said.
“Militancy in the northwest is dangerous for Karachi as well, as foreign investors take a general view of the whole country,” Motiwala said.
The situation also bodes ill for the stock market, still recovering from an abysmal 2008, when it suffered heavily from political turmoil, militancy and the global recession.
“Violence in Karachi affects market sentiments and results in a slowdown in foreign investment,” said Mohamed Sohail, chief of Topline Securities.
The government paid around Rs2bn ($24mn) to traders and shopkeepers whose shops and commodities went up in smoke when arsonists and rioters went on the rampage after the December 28 attack.
“Violence after the blast on Ashura damaged around 1,500 shops in 30 markets in Karachi, which damaged confidence of investors a great deal,” said Motiwala.
Hundreds of workers are still out of work, waiting for their businesses to be rebuilt.
They experienced further problems from political violence, which officials say has killed around 85 people, mainly activists from Awami National Party (ANP) and Muttahida Qaumi Movement (MQM) so far this year.
“I am father of four surviving on daily wages,” said 31-year-old Mohamed Asghar, who said for four days he could not go out to work in his western Orangi neighbourhood, where many of the killings were concentrated.
“My pocket feeds my children. When it is empty my kids go hungry,” he said.
A wave of political and sectarian violence sweeping Karachi threatens heavy financial losses in the country’s economic hub, where analysts fear Islamists are bent on fanning maximum instability.
Bomb attacks targeting Shias have killed 76 people in six weeks, devastating riots and a surge in political shootings have sparked fears that after relative quiet, Karachi is returning to the eye of the storm.
Pakistan’s richest city has been spared the worst of a two-year Islamist bombing campaign but is plagued by crime and kidnappings, which some analysts say militant groups use to bankroll campaigns in the northwest and Afghanistan.
“Karachi accounts for nearly 45% of Pakistan’s GDP,” independent economist AB Shahid said.
“It translates into roughly Rs15bn ($180mn) per day and tax revenues of Rs1bn per day,” he said.
The city is a national headquarters for industry and the service sector, a bustling port city on the Arabian sea with a teeming population of 16mn.
“If the collapse of Pakistan’s economy is the intention of its adversaries, then the easiest route to follow is ensure that Karachi’s activity comes to a complete standstill,” said Shahid.
Pakistan recorded 2% gross domestic product growth last fiscal year, which ended on June 30, the worst-recorded economic growth since the financial year 1997-1998.
Ashfaq Hasan Khan, once economic advisor to former president Pervez Musharraf, said violence in Karachi was aimed at crippling Pakistan’s economy.
“Karachi has been spared of terrorism and violence for a long time and was contributing massively to the country’s weak economy, but now the plotters want to completely cripple Pakistan’s economy by attacking our port city,” he said.
It is largely impossible to calculate exact losses caused by violence and closures, such as for mourning after December 28 and February 5 bomb attacks on Shias.
The shutdown of the city Saturday, when thousands attended funerals for the 33 people killed on February 5, cost Rs12 to 15bn, he estimated.
Officials say growing security concerns and targeted killings, which have exposed political tensions, tarnish Karachi’s attraction for foreign investors.
“We are painstakingly convincing foreign investors to come here and many of them do agree but one incident forces them to pull back,” Zubair Motiwala, an investment adviser in the provincial government, said.
“Militancy in the northwest is dangerous for Karachi as well, as foreign investors take a general view of the whole country,” Motiwala said.
The situation also bodes ill for the stock market, still recovering from an abysmal 2008, when it suffered heavily from political turmoil, militancy and the global recession.
“Violence in Karachi affects market sentiments and results in a slowdown in foreign investment,” said Mohamed Sohail, chief of Topline Securities.
The government paid around Rs2bn ($24mn) to traders and shopkeepers whose shops and commodities went up in smoke when arsonists and rioters went on the rampage after the December 28 attack.
“Violence after the blast on Ashura damaged around 1,500 shops in 30 markets in Karachi, which damaged confidence of investors a great deal,” said Motiwala.
Hundreds of workers are still out of work, waiting for their businesses to be rebuilt.
They experienced further problems from political violence, which officials say has killed around 85 people, mainly activists from Awami National Party (ANP) and Muttahida Qaumi Movement (MQM) so far this year.
“I am father of four surviving on daily wages,” said 31-year-old Mohamed Asghar, who said for four days he could not go out to work in his western Orangi neighbourhood, where many of the killings were concentrated.
“My pocket feeds my children. When it is empty my kids go hungry,” he said.
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