This week’s newsletter will be short. Partly because after listening to our audience, we are developing more video content for YouTube. And more so because this past week I graduated from Harvard Business School! While the pandemic affected my MBA experience slightly, it also gave me the time to return to my passion for economics and Pakistan. Learning to create a team, raising funds for a side hustle and engrossing myself in public data, greatly enriched my MBA experience. I want to thank all of Macro Pakistani’s followers for their continued support and hope you continue with us on our journey to decode Pakistan’s economy in bite sized digestible pieces.
Along with an economic recovery, inflationary pressures have been the theme of Pakistan’s economy in this past year. While we publish monthly inflation numbers and weekly sensitive prices, along with explanations, our graphics page illustrates most clearly, what the trends have been. Prices have been on the rise for most periods, with food inflation dominating. The lowest 20% of the country (Q1) have consistently faced the highest inflation burden. Read our Weekly Data Watch below to understand what the data says but we also encourage you to visit the interactive charts on our website to understand which commodities have been driving inflation in this past year.
KSE-100 hit two record highs in volume, after 2.2 and 1.6 billion shares were traded across consecutive days. Weekly average traded volume rose to 1.2 billion, which is the highest ever recorded. Highest interest was in the stock for WorldCall, which had over 1.5 billion worth of shares traded in two days. While it is a low value individual stock, the whole market moved up as the economy recovers. However, the PKR/USD exchange rate continued to depreciate, fluctuating between the PKR 154-155 level. Gold prices continued their upward trajectory, with international prices up over 6% since last month.
The annual change in Sensitive Price Index is down to 16.34% vs. 17.23% last week. This is the first time in 4 weeks that annual change in SPI fell as weekly inflation dropped by 0.63%. The change is also the lowest recorded in 9 weeks. The whole country experienced lower inflation on an annual basis than last week. The lowest 20% of the population still faced highest inflation burden. Prices of Tomatoes (+2.76%), Masoor (+2.25%) and Milk (+0.36%) increased slightly this week. However, inflation for the week dropped mainly because prices for Chicken (-14.49%) and Onions (-10.61%) fell. Chicken alone contributed to almost 75% of the decrease in overall prices for essential commodities for the week, leading to lower food inflation.
What Else We’re Reading (Local)
- While recent rally is contributing to the shift in sentiments as the new FM has a growth-oriented leaning, point is to get not too excited by this (Business Recorder)
- Power subsidies for next budget will be allocated on basis of actual consumption and government will adopt a more targeted approach for disbursement (Profit)
- Circular debt has increased due to excess capacity contracts inherited by the government and the impact of COVID-19 as no tariffs were increased (The News)
What Else We’re Reading (International)
- Pakistan’s inability to undertake long-overdue economic reforms is creating challenges for the China-Pakistan Economic Corridor (USIP)
- Pakistan to raise USD 500 million with the sale of a debut green bond that may lead the way for similar deals from the nation to fund hydroelectric projects (Bloomberg)