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    Economic crisis deepens amid political instability

    Economic crisis deepens amid political instability

    Industrialists and analysts express growing concerns as political protests and wheat farmer demonstrations escalate, casting shadows over business activities and economic stability.

    The business community, already beset by high inflation and interest rates, feels that political issues overshadow economic priorities.

    “A rising tide of unrest and protests against the government has cornered the economy, making it difficult for businesses to operate effectively,” one businessman stated anonymously, reflecting the prevalent fear of backlash for speaking out.

    Some traders and industrialists note that persistent political disturbances have dashed hopes for stability after visible economic improvements compared to last year.

    Industrialists, analysts lament govt yet to develop long-term growth strategy

    “There is no sign of stability in the government, which reflects rising vulnerability in the economy,” said AamirAziz, an exporter.

    “Daily remarks from the Supreme Court and high courts on political and corruption issues leave us in limbo, particularly concerning our future strategies,” Mr. Aziz said. He emphasized the need for a well- defined economic and political roadmap to attract investment.

    A Karachi-based head of research noted that trade and industry were not clear about the economy’s future, and the present government has yet to develop a long-term growth strategy.

    He lamented that economic growth, which must be the government’s priority, has been put under the shadow of inflation and interest rates. He said the State Bank of Pakistan (SBP) has also failed to spur growth or bring down inflation and appears to be overwhelmed by the challenge.

    The private sector is working with least participation, which will bring down the growth rate to even lower than two per cent this year. “Despite sovereign default, Sri Lanka recovered within two to three years and the current inflation is 7.5 per cent. This is not a miracle but management,” he said.

    Some bankers believe that the SBP is managing the exchange rate, and this stability may vanish in one go.

    Amid these economic challenges, analysts also noted some positives, such as Saudi investors’ interest in major Pakistani assets, which could temporarily bolster the country’s external accounts. However, the looming need for $25 billion for debt servicing next fiscal year and a persistent trade deficit threaten to offset these gains.

    “The stable exchange rate is not the benchmark for the economy’s growth. It is only a sign that the country can pay back the dues and be able to trade with any country,” said Atif Ahmed, a currency dealer in the interbank market.

    He noted that the current account deficit has significantly decreased, vet the SBP’s foreign exchange reserves are largely borrowed, showing no clear policy on managing external and domestic debts.

    Muhammad Anus
    IBM UET lahore


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