Macro Bites

Macro Bite # 29

4 min read

Year 2020 has been a tumultuous one. Pakistan’s economic woes started even before COVID-19. The country was feeling the pain of high inflation and stabilization measures demanded by the IMF program. The pandemic upended life as we knew it across the world. It became harder and harder to find the signal amongst the noise of breaking news. Macro Pakistani has tried to play its part in slowing down the information and providing you with bite sized digestible pieces that will help you make more sense of what’s happening around you.

Our increasing following and engagement has exceeded all expectations we had set back in July 2020. On a personal note, I had said I would invest more in Macro Pakistani if we crossed 1,000 followers. As of the close of this year, we are about to touch 10,000 followers across platforms. Thank you for your support and please continue to share with people who you think will find it useful to know the basics of the Pakistani economy!


The KSE-100 crossed 44,000 level after 30 months, fueled by positive news of increased liquidity in the power and oil sectors, along with the extension of the COVID construction package for another year. The index returned over 7% in 2020, despite the impact of COVID-19. After reaching record highs in August, gold prices have fallen but are also still up over 25% in 2020. Strong performance of the current account in the tail end of the year continues to ensure stability of the exchange rate around the PKR 160/USD mark. The annual change in Sensitive Price Index fell to 6.13% compared to 7.66% last week.

Most importantly, this week was the first week since Macro Pakistani started tracking prices that the poorest of the country (Q5) did not experience the highest burden of inflation. In December alone, the Sensitive Price Index is down over 1%. The drop in inflation was due to falling prices of Onions (-11.07%), Potatoes (-9.33%), Chicken (-9.10%) and Tomatoes (-4.55%). While increase in price of Sugar (+2.36%) should be a cause of concern, controlling food inflation in the last few months is something the government should be commended on. On an annual basis, prices of most items (especially chilies powder, eggs) have increased to staggering levels. Stay tuned to see more updates coming soon on our dedicated page for illustrative data on Pakistan’s economy.

Year in Review: 3 things that stood out in Pakistan

By Faiz Ahmed
Doing a Year in Review in December is a bit premature since Pakistan’s financial year runs from July to June. However, there are enough emerging data points to indicate a strong recovery in 2021, while some raise further concerns. Hence, Macro Pakistani will do a premature Year in Review and select three things that stood out in 2020.
You can read all about the recovery in trade and double-digit food inflation in the full article.
Read more


For this email, we want to focus on the leading indicator of consumer confidence. An indicator for Consumer Confidence Index above 50 shows that people hold more positive than negative views about the current or future economic conditions of the country. If the same number is below 50, consumers hold more negative than positive views. In Pakistan, since July 2018, when the PTI government came to power, consumers have believed that Expected Economic Conditions (dark grey) are better than Current Economic Conditions (light grey). Pakistan is a hopeful nation.

Consumer Confidence Survey Results (2018 – 2020)
Consumers have believed that the future will be better than the present since July 2018, even during the lows of COVID -19
Source: Consumer Confidence Survey – SBP and IBA, MP Analysis


The average of the two gives us the Consumer Confidence Index (green), which has been on the decline since rising to 56 in September 2018. In January 2020, even before COVID-19, the index fell below 41 for the first time since November 2014. Just when the economy started to show signs of recovery, the pandemic worsened consumer sentiment, which fell to historic lows until July 2020. As Pakistan seemingly defeated the pandemic and lifted restrictions, sentiments improved again in September 2020. However, the second wave of infections dampened consumer confidence, with the majority of households holding negative views about the current and future economic conditions in the country. All throughout 2020, the index has remained below 50. Nevertheless, Pakistanis continue to believe that the future will be better than the present.

What Else We’re Reading (Local)

  • Addressing Karachi’s well known developmental challenges requires accurate figures which the recently approved Census 2017 fails to provide (Dawn)
  • Resolution of circular debt of energy chain companies with IPPs is almost finalized with a roadmap for the payment of outstanding receivables. (Business Recorder)
  • 47% of Pakistanis are hopeful of good future in the new year 2021 in comparison with 43% hope prevailing among 46 nations surveyed (The News)
  • Pakistan posts ‘highest export ever in the month of December’, growing by 18.3% to USD 2.4 billion in December 2020 (Profit)

What Else We’re Reading (International)

  • Oxford, Astra Zeneca vaccine gets approval in the UK, becoming the third vaccine authorized to fight COVID-19 in the West despite lower effectiveness (Wall Street)
  • To effectively bank the unbanked, the key problem to solve is to figure out how to help people generate more income (Forbes)
  • 2021 may be a year of bumper growth with a frustrated desire to spend likely to carry echoes of the Roaring Twenties post the 1918-20 influenza (Financial Times)

Faiz Ahmed

MBA Candidate at Harvard Business School with prior experience at Bain & Company, International Finance Corporation and State Bank of Pakistan. He is also the Founder of Macro Pakistani.

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