Even as the PMLN-led ruling coalition marks one year in office with notable macroeconomic achievements, it must not lose sight of its inability to translate these into tangible benefits for the average citizen.
In February 2024, when the incumbent government assumed office, inflation stood at 23.1%; a year later, it has slowed to 1.5%, the lowest rate since 2015. Analysts attribute this downward trend to economic stabilization efforts supported by a $7 billion aid package from the International Monetary Fund (IMF), as well as a high base effect arising from years of backbreaking inflation that peaked at 37.97% in May 2023.
The stabilization efforts have further resulted in the country’s total liquid foreign exchange reserves hitting $16.4 billion in December 2024, including $11.9 billion in State Bank of Pakistan reserves. Unfortunately, these macroeconomic gains have not translated into tangible benefits for the general populace.
According to the detailed results of the 2023 population and housing census, around 11% of the country’s working population is unemployed, while the World Bank has estimated the poverty rate at 25.3%. Even among the employed, underemployment and the informal nature of much of the economy continues to hinder any significant improvements in livelihoods.
A persistent concern is the ongoing decline in large-scale manufacturing, which contracted by 1.25% in the first five months of the ongoing fiscal year when compared to the corresponding period of last year. The stagnation in the sector weakens demand for labor and limits efforts to increase wages, negating the slowdown of the inflation rate.
With promised relief in the form of higher wages and cheaper utilities unrealized, public dissatisfaction is mounting. The only way out of this morass is a more inclusive economic strategy. By shifting its focus toward public welfare, the government can ensure economic gains are equitably distributed. Achieving this requires implementing policies that address unemployment, revitalize the manufacturing sector, and provide social safety nets for the impoverished.
If the government continues to ride the coattails of macroeconomic gains while appearing indifferent to the plight of the common man, any further gains will be perceived as little more than elite capture. Without urgent reforms prioritizing ordinary Pakistanis, macroeconomic stability will remain a hollow victory, only serving to fuel further discontent and erode public trust in the government.