From an editorial today in The News1:
The KSE crash is of course only a reflection of the overall situation of the economy and, dare one say, the polity. The grim reality is that Pakistan finds itself in the grip of both economic and political turmoil. The two are indeed closely tied together. The economic crisis – high inflation along with a mounting budget and trade deficit along with declining investment, a weakening currency and capital flight – is contributing to political uncertainty, with expectations that it may be used against the government with the grim inflation figures and lowered debt rating offered up as evidence of the inability of government to deliver. At the same time, in the immediate future, there can be little hope of the political stability that would be needed to boost investor confidence and create an environment conducive to economic growth. The vicious cycle seems unbreakable for the present. The mood at the stock market has indeed remained downbeat for weeks. This is unlikely to change soon given the turbulence in the political atmosphere, and a long, rocky road towards recovery from both political and economic crisis still lies ahead.
1 “Black Friday”. The News. May 25, 2008.