Political crisis pose serious threats to Pak’s economy: FM

ISLAMABAD: The ongoing political crisis in the wake of political tensions between the government and the Opposition poses a serious threat to the economy as it can harm the already fragile economic recovery, The News reported on Tuesday, citing the Ministry of Finance.

In its monthly Economic Update and Outlook, the ministry noted: “The domestic and international scenario has begun to change which may have implications for the economic recovery…inflation and internal sector risks are coming into action to build macroeconomic imbalances.”

The ministry further stated that the recent geopolitical tensions, in particular, the Ukraine crisis, is the most important external risk factor while “domestic political tensions” are building domestic risks.

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“A further escalation of these risks hamper the positive outlook for Pakisatn’s economy and may also aggravate the macroeconomic imbalances.”

The finance ministry said economic performance continues to be strong and is still on a trajectory compatible with an economic growth target of around 5% in the current fiscal current year.

“However, the intensity of internal and external risks has still not be realised which may adversely affect domestic economic activities,” it added. “Further inflation and current account deficit are still under pressure.”

In the period bewteen November-February of the ongoing fiscal year inflation fluctuated around 12% on average. “This was a marked upward shift from the ealier four months (July-October FY22) when average inflation rate was 8.7%.

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The upward shift was mainly contributed by the persistent and significant rise in international prices, especially oil, food, and other primary commodities.

“Thus, economic recovery from the COVID-19 pandemic and the supply bottlenecks caused unprecedented surges in inflation in many parts of the world, which had spillover effects in Pakistan,” the document read.

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