Pakistan’s economy has a serious price spiral problem. Soaring inflammation is eating away purchasing power and the trends hint at a breakdown of sorts, if no rectification is done earnestly. As of today, inflation stands at a 13-year of 22%. A host of factors such as supra-raise in oil and food prices are responsible for this out-of-reach economy, but it goes without saying that ad-hocism at work while opting for a sustainable path has played mess with consumers. Piecemeal measures have never worked and lack of a long-term policy is endangering survival of the masses in the middle and poverty driven cadres.
To further compound the consumer index is the deal stuck with the IMF, which has led to an unprecedented rise in oil and energy prices, literally jamming the wheel of the economy. As the trend goes, withdrawal of subsidies demanded by the Fund will come to unnerve growth prospects. Prices of essential commodities have risen manifold, with no check on it. Government efforts to come up with relief packages in the form of food subsidy and a token cash endowment are too little to make a difference. The resultant is that prices are skyrocketing leading to shrinking market activity. This is one of the first indicators as economies slump and override quick fix solutions. Colombo recently went this route, and Islamabad is almost on it.
While the government warns of even tougher times ahead with petrol likely to go beyond Rs300 a litre by year-end, it has no plan at work to subside the lethal impact. Slump in industrial ouput, especially in textile-related produce, is likely to see a loss of $1 billion in exports. This will see more imports dubbed as necessary such as edible oil, tea and pulses. Sugar and wheat import too is on the cards, making it a perfect case of a disaster in the making. With Pakistan in need of around $40 billion to stay afloat in next 12 months, it is a gigantic task. Inflation is simply eroding the base of microeconomics to a grinding halt at the altar of public lives. Tapping new avenues of energy imports and mushrooming local agrarian and industrial output is a must to browbeat reactionary trends in economy.
Published in The Express Tribune, July 3rd, 2022.
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