Macro Bites

Macro Bite # 90

2 min read
In a dramatic week of politics where the government first claimed victory and then the opposition, only one side emerged as the undisputed loser—the Pakistani people. Pakistan has a long history of political parties prioritising their narrow self-benefit over the public good, and this week was no different.

Amid a widening current account deficit, and a global commodity price spike, the underlying numbers have not looked for the government for a while. But this week’s economic crisis was driven almost entirely by the reckless actions of our elected leaders, culminating in a drawn-out Supreme Court case, and lots and lots of memes.
As Pakistan stumbled on with essentially no government for a week, the KSE-100 dropped sharply, weekly inflation shot up, and the PKR/USD exchange rate rose to over 188. Meanwhile the IMF was forced to clarify that it had not suspended any program, it was merely waiting for a new government to come in to resume engagement—which only led to further panic.

All this could have been easily avoided if the government and the opposition had earlier negotiated in good-faith and perhaps called early elections (at a constitutionally appropriate time) if it had become clear that the government no longer commanded a parliamentary majority. Instead, what we got was political gamesmanship and conspiracy theories.

Unsurprisingly, the KSE 100 and exchange rate both stabilised in the aftermath of the Supreme Court verdict, which at least provided some certainty. But the path to genuine stability is long and perilous. And in this country, there’s always an actor willing to jeopardise it all for narrow short-term gain.



KSE-100 fell this week because, in case you missed the news, we didn’t have a government for five days. PKR depreciated slightly this week, as the Supreme Court verdict and SBP policy rate increase stemmed a further drop. Local gold prices rose this week.

The annual change in Sensitive Price Index rose to 17.87% vs. 16.79% last week. The poorest of the country (Q1) experienced a change of 16.13% vs. 18.47% for Q5. On a weekly basis, prices rose for all quintiles by 1.53%.

Increase in prices of Tomatoes (+52.8%) and Onions (+27.3%) contributed to weekly inflation. A fall in the price of Chicken (-2.92%) and Wheat Flour (-0.68%) helped moderate inflation this week.

What Else We’re Reading (Local)

  • What is the real unemployment rate in Pakistan? Depends who you ask. (Profit)
  • This week was not the first time that the Supreme Court has decided the fate of a government. Its mixed verdicts reflect the country’s chequered history. (Dawn)

What Else We’re Reading (International)

  • If our currency survives, consider visiting Thailand, where the government has relaxed Covid-19 rules in an effort to boost tourism (Bloomberg)
  • Ketanji Brown Jackson was confirmed this week as the first black woman to serve on the US Supreme Court. (FT)

Asad Pabani

Journalist, researcher and documentary filmmaker. Prior works featured in Dawn, Soch Videos and Pioneers Post.

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