Inflation in Pakistan has surged at an alarming pace, reaching 36.4 percent by April 2023, marking a staggering increase of 13.2 percent points within seven months.
According to a Reuters report, Pakistan’s consumer price index (CPI) for December soared by 29.7% compared to the previous year, as per data from the Pakistan Bureau of Statistics.
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Causes of Inflation:
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- Government Negligence: Successive governments have failed to prioritize initiatives aimed at bolstering income levels by supporting existing businesses and fostering the growth of new ones.
- IMF Impositions: Stringent conditions imposed by the IMF have led to skyrocketing energy costs, particularly electricity tariffs, rendering many production units unviable due to inflated operational expenses amidst stagnant consumer purchasing power.
- Currency Depreciation: The depreciation of the Pakistani rupee has further exacerbated inflation, particularly impacting the prices of imported consumer goods.
- Depleted Foreign Reserves: The critical depletion of foreign reserves has resulted in restrictions on imports, including essential items like life-saving drugs, exacerbating supply shortages.
- Stagnant Export Markets: Pakistan’s failure to diversify and expand its export markets has left it lagging behind other economies. For instance, while countries like China and India have significantly expanded their export footprint in Africa, Pakistan’s exports to the continent remain minimal, underscoring the need for diversification and innovation in export strategies.
- Economic Isolation: Pakistan’s economy is relatively closed compared to its peers, with limited export diversity and overreliance on import tariffs for revenue generation, which undermines trade integration and weakens export competitiveness. Comprehensive reforms are imperative to enhance competitiveness and promote export-driven growth.
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The Urgent Need for a Strategic Response:
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- Prioritizing Productivity: Redirecting funds towards productive endeavors is paramount, making endeavors such as rebuilding government houses in Punjab seem misplaced amidst the pressing need for economic revitalization.
The current scenario underscores the gravity of the situation, emphasizing that the onus is on the ruling party, particularly the PML-N, to deliver tangible solutions to address inflation and steer the economy toward stability and growth.
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The writer is a lawyer, academic and political analyst. She has authored a book titled ‘A Comparative Analysis of Media & Media Laws in Pakistan.’ She can be contacted at: yasmeenali62@gmail.com and tweets at @yasmeen_9
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Asking relief from the ones who are responsible for inflicting wounds of exorbitant energy prices, the mother of the inflation.