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Economical unstability

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By Syeda Wafa Bukhari 

Pakistan’s economic situation has been deteriorating due to long-standing structural weaknesses. Between 2001 and 2018, over 47 million Pakistanis were lifted out of poverty due to the expansion of off-farm economic opportunities and increased remittances.

However, despite the rapid reduction in poverty, this process has not led to significant improvements in social and economic conditions.

This is because human capital outcomes have remained poor and stagnant, with high levels of stunting at 38 percent and learning poverty at 75 percent

The economy of Pakistan is experiencing a significant amount of stress due to low foreign reserves, an unstable currency, and high inflation. The high public consumption has resulted in the economy growing above its potential in FY22, which has created pressure on domestic prices, external and fiscal sectors, the exchange rate, and foreign reserves.

The economic imbalances in Pakistan have been made worse by a number of factors, including the devastating floods of 2022, the rising prices of commodities worldwide, more difficult global financing conditions, and political instability within the country.

In addition to these other factors, there have also been some policy measures that have caused issues. For example, informal exchange rate restrictions and import controls have delayed the IMF-EFF program and led to creditworthiness downgrades. This has resulted in lower confidence, higher yields and interest payments, and the loss of access to international capital markets.

The Government of Pakistan is currently facing a challenging task in terms of maintaining progress towards macroeconomic stabilization. The economic outlook is heavily dependent on the timely and complete implementation of policy reforms. There are significant risks associated with the situation, which could result in negative outcomes.

The writer is a student of BS Journalism studies at Punjab University and can be reached at:[email protected].

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