Prime Minister Imran Khan may claim that Pakistan has done better than other countries when it comes to inflation, the reality, however, is different.
As Dawn columnist Khurram Hussain notes, “this is not the first time we are seeing growth with inflation in our country. We have been down this road before, and it is worth our while to recall what key lesson needs to be learned from our previous experience.”
In 2003, Hussain notes, “inflation had begun to rise and in the years that followed it spiraled to reach historic proportions. Then, as now, the government first tried to spin it away.” The reality was that “the prevailing inflation in Pakistan was due more to monetary factors, meaning an excess amount of money creation, rather than supply-side factors like temporary shortages or global price increases in fuel.”
Hussain reflects that “It is critical to not repeat history. Today, there is a dire need for independent researchers to step forward once again, and tell us whether or not the large money supply growth of the recent past lies behind the rising inflationary tide engulfing the country.”
Hussain concludes by noting that “This government has administered a stimulus more massive than the economy could productively use in the name of saving the economy from Covid. For a while, it worked and they were able to claim success in reviving growth. But now comes the time to pay the bill. And where the fruits of the growth were appropriated by the wealthy, the bills will be paid by the poor in the form of runaway inflation.”