Pakistan’s improving macroeconomic indicators have yet to benefit a general public continuing to reel from years of back-breaking inflation
The Pakistan Stock Exchange has soared past the 100,000-point mark for the first time in the country’s history, triggering jubilation from economists and government officials alike. Hailing the development, Prime Minister Shehbaz Sharif claimed it reflects investors’ trust in government policies and vowed to continue working for the country’s progress. Yet, while investors and the business elite celebrated, little attention was paid to the common man who has yet to see any significant benefit from the success of the stock market.
From November 2021 through July 2024, Pakistan consistently reported two-digit inflation, peaking at a back-breaking 37.97% in May 2023. The recent decline, while appreciable, is owed largely to this base effect, as well as an improvement in food supplies and a decline in global oil prices. For the common man, struggling to make ends meet with minimal raises to salaries, the cost of living remains untenable. The past three years have seen a significant decline in the average consumer’s purchasing power, made worse by hefty utility bills that now trigger annual protests during the peak of summer. Even as economic growth slowly rebounds, industrialization continues to lag, indicating little chance of a boost to real incomes in the near future. The much-hyped IMF program, necessary to avoid a balance of payments crisis, all-but-ensures low growth for several more years, heralding more misery.
To overcome this crisis, the government needs to increase its revenue, particularly through taxes. This must come from people who can barely afford two meals a day, pushing them further toward virtual poverty. The political costs of this cannot be ignored; and likely play some role in the search for a “messiah” that many see in former prime minister Imran Khan.
One can’t fault the government for wanting to commemorate even the slightest economic success when just 17 months ago the country was on the brink of default. Until the benefits can be passed on to the common man, however, celebrating the stock exchange boom is akin to rubbing salt in their wounds.