Pakistan’s resilient economy is stuck, once again, between a rock and a hard place. The high political drama and global geopolitical crisis have brought it to a crossroads. The way forward is full of pain, and no path towards economic stability is possible without political stability.
In 2022, the economy has deteriorated from bad to worse. The outlook for the next year suggests that the tough phase may continue for some time, despite the government taking some corrective measures immediately.
A section of experts believe that the country is headed towards witnessing “negative economic growth” for the third time in the history of Pakistan in the current fiscal year (July-June) 2022–23.
The key crisis in the domestic economy is the fall of the country’s foreign exchange reserves to an alarming level of $5.8 billion and the repayment of foreign debt worth $73 billion in the next three years (till the end of fiscal year 2025).
The rest of the crises in the economy are by-products of the key crisis. They include a 49-year high inflation rate of 27%, a 23-year high key policy rate (benchmark interest rate) of 16%, an increased rate of taxes, and a 28% devaluation of the domestic currency to Rs 227 against the US dollar in 2022.