Pakistan leads emerging markets in sovereign risk recovery, says Bloomberg Intelligence
In a positive development on the economic front, Pakistan has emerged as the most improved emerging market in terms of sovereign credit risk, according to the latest analysis by Bloomberg Intelligence.
Backed by macroeconomic stabilization, structural reforms, and successful engagement with the International Monetary Fund (IMF), the country has recorded the sharpest decline in default risk globally over the past year—signaling renewed investor confidence and growing financial credibility, said Khurram Schehzad, Advisor to Pakistan's Finance Minister, in a post on social media platform X on Saturday.
'As per the latest data posted by Bloomberg Intelligence, Pakistan stands out globally as the most improved economy in terms of reduction in sovereign default risk, as measured by Credit default swaps (CDS)-implied probability.
'Pakistan topped Global EM Rankings in default risk reduction, as the country has recorded the largest drop in sovereign default risk globally over the last 12 months,' said Schehzad.
A CDS is a financial derivative that allows an investor to swap or offset their credit risk with that of another investor. To swap the risk of default, the lender buys a CDS from another investor who agrees to reimburse them if the borrower defaults.
Citing Bloomberg Intelligence data, default probability was down from 59% to 47%, an 11 percentage point improvement, said Schehzad.
'This marks the sharpest decline among major emerging markets, ahead of Argentina (-7%), Tunisia (-4%), and Nigeria (-5%). In contrast, countries like Turkey, Ecuador, Egypt, and Gabon have seen their default risks rise.'
Schehzad was of the view that the decline in Pakistan's risk signals renewed investor confidence—fueled by 'macroeconomic stabilisation, structural reforms, successful IMF engagement and timely debt repayments, and improved credit outlooks by S&P, Fitch, and others'.
'Pakistan is not only back on the map—it is moving forward with stability, credibility, and reform at its core,' he said.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
3 hours ago
- Business Recorder
Saudi Arabia's net foreign direct investment falls 7% in Q1
RIYADH: Saudi Arabia's net foreign direct investment (FDI) fell 7% in the first quarter of 2025 compared to the previous quarter, government data showed on Sunday, as the kingdom continues to lag behind its ambitious FDI goals. The kingdom drew 22.2 billion riyals ($5.92 billion) in FDI in the three months ended March 31 from 24 billion riyals ($6.40 billion) in the last three months of 2024. Net FDI rose 44% compared to the same quarter the previous year when the kingdom drew 15.5 billion riyals ($4.13 billion), the General Authority of Statistics data showed. Raising FDI is a key element of the kingdom's Vision 2030 economic transformation programme, which aims to lower the country's dependence on oil, expand the private sector, and create jobs. Saudi Arabia has set a goal of attracting $100 billion in FDI by 2030, spending massively on huge development projects known as 'giga projects' and expanding sectors like sports, tourism, and entertainment. But FDI numbers remain far from that target. Saudi Arabia has been seen as a source of capital rather than a home for investment, and foreign investors can find it difficult to navigate the kingdom's business environment, sources told Reuters when the FDI goal was first announced in 2021. The kingdom is projected to post a fiscal deficit of around $27 billion this year, which will largely be financed by borrowing, said a recent report by the International Monetary Fund. Saudi Arabia's crude exports rise to 6.166mn bpd in April Saudi Arabia was the largest emerging market dollar debt issuer last year, but the IMF says the country has room to continue borrowing, with its net debt around 17% of GDP making it one of the least indebted nations globally. Riyadh has taken steps to encourage foreign firms to invest more in the country. Since 2021 companies seeking to secure state contracts have been required to set up their regional headquarters in Saudi Arabia. The government has also said it would update existing investment laws to boost transparency and promote equal treatment of local and foreign investors.
Express Tribune
10 hours ago
- Express Tribune
Pakistan tops rankings for risk improvement
Listen to article In a major economic milestone, Pakistan has emerged as the top-performing market in the Global Emerging Market (EM) Rankings for reducing sovereign credit risk, according to a new Bloomberg Intelligence report. Over the past 12 months, Pakistan recorded the largest drop in sovereign default risk worldwide, measured through Credit Default Swaps (CDS), highlighting improved creditworthiness and economic stability. The CDS-implied probability of default has decreased significantly, positioning Pakistan at the forefront of the global EM pack. While Bloomberg's terminal data isn't widely accessible, the report was shared by Finance Minister's adviser Khurram Schehzad on social media platform X, sparking optimism within the financial community. Schehzad wrote, "As per the latest data posted by Bloomberg Intelligence, Pakistan stands out globally as the most improved economy in terms of reduction in sovereign default risk, as measured by CDS-implied probability." He added, "This is a resounding signal to global investors: Pakistan is not only back on the mapit is moving forward with stability, credibility, and reform at its core." According to the report, Pakistan's default probability fell from 59% to 47%, marking an 1,100 basis point improvementsharper than reductions seen in Argentina (7%), Tunisia (4%), and Nigeria (5%). In contrast, countries like Turkey, Ecuador, Egypt, and Gabon saw increases in their risk levels.
Business Recorder
14 hours ago
- Business Recorder
Words of caution from Summer Davos
EDITORIAL: It's not every day that the president of the World Economic Forum warns of a 'decade of lower growth.' But that's precisely the message Børge Brende delivered at Summer Davos in Tianjin — a sobering forecast that goes beyond the usual Davos-speak of digital revolutions and climate partnerships. The world, he said, is entering its most geopolitically complex period in decades, and the headwinds facing global growth are intensifying, not fading. Markets have grown used to brushing off geopolitical shocks. The pandemic was followed by a rapid recovery. Russia's invasion of Ukraine triggered initial panic, but portfolio flows resumed quickly. Even the Israel–Iran war, despite its high stakes, has not yet translated into a prolonged financial crisis. But the accumulation of risks — trade fragmentation, armed conflict, political instability — is beginning to show up in macro projections. Both the World Bank and IMF have now revised global growth forecasts for 2025 downward, from 2.7pc to around 2.3pc. That may not sound catastrophic, but in a world fuelled by debt and liquidity, even a half-point drag on global GDP has wide-ranging implications. It affects not just trade flows and commodity demand, but sovereign debt sustainability, social stability, and the room central banks have to ease. Brende's warning is timely, not just because of the numbers, but because of the structural shifts underway. The world isn't simply in a slowdown — it's in the early stages of a strategic reordering. The US-China trade war, once dismissed as a Trump-era anomaly, is now institutionalised policy. China, which still accounts for about 30 percent of global growth, is shifting inward — away from export dependency and toward domestic consumption and digital services. That transition is necessary, but it's not without turbulence. Beijing's real estate market remains fragile, consumer confidence is uneven, and supply chain recalibrations are far from complete. If the Chinese engine sputters, the rest of the world will feel it. In parallel, the multilateral trade order that underpinned decades of growth is losing traction. New regional blocs, tariff walls, and subsidy races have become the norm. The return of industrial policy may excite national planners, but it fragments global efficiency. When war in one region sends insurance premiums, energy costs, and shipping rates soaring, it becomes harder to pretend these shocks are local. They're systemic—and cumulative. What's particularly worrying is that none of this exists in isolation. As Brende pointed out, the traditional lines between economic and security policy are now blurred. Conflict doesn't just disrupt supply chains; it drives trade strategy. Currency wars give way to chip bans. Defence deals morph into energy alliances. And through it all, global governance institutions struggle to keep pace. For developing economies, including Pakistan, this complexity is doubly dangerous. Growth in the Global South has historically ridden the coattails of open trade, capital flows, and commodity cycles. Now, with a flipped interest rate cycle, declining aid flows, and a global turn inward, that model is under pressure. And while the wealthy world debates reshoring and AI regulation, developing countries are facing food inflation, energy volatility, and climate shocks without the fiscal space to absorb them. The point is not that growth will vanish. It won't. But its sources, reliability, and beneficiaries are shifting. If the coming decade is marked by structural fragmentation and political brinkmanship, growth will become a more selective story—dependent on stability, institutional strength, and geopolitical alignment. Brende's message, then, isn't just a warning. It's a challenge to policymakers who still act like the post-2008 playbook applies. It doesn't. The new normal is one of overlapping crises, diminishing buffers, and increasingly short market patience. Anyone not preparing for that reality is setting themselves up for failure. Copyright Business Recorder, 2025
