The State Bank of Pakistan (SBP) held the policy rate at 11 per cent on July 30. While slowing inflation and forex reserves recovery have given Pakistan the room to breathe, the central bank remains conservative as it seems aware that global and domestic uncertainties could quickly disrupt this fragile balance. A steady hand, rather than bold moves, currently defines the SBP’s approach.

With the SBP now in a pause mode, the question is whether credit uptake, private investment, and industrial output will gain meaningful momentum.

Despite signs of modest recovery in exports, remittances and lately in manufacturing, the past two years have largely delivered jobless growth.

One key reason is the conditionality-laden International Monetary Fund programme. While essential for macroeconomic stability and restoring fiscal discipline, it has also required cuts in public spending, hikes in energy tariffs, and a tight monetary stance — policies that dampen aggregate demand and discourage labour-intensive investment. As a result, small and medium enterprises, retail sectors, and informal job markets — Pakistan’s real employment engines — have struggled to recover.

Beneath the surface of much talked about ‘macroeconomic recalibration’ lies a deeper, troubling truth: the fruits of this so-called recovery have not reached the working class

Beneath the surface of much talked about “macroeconomic recalibration” lies a deeper, troubling truth: the fruits of this so-called recovery have not reached the working class.

While the SBP’s cautious optimism and improved economic indicators signal stability to international lenders and market watchers, the average Pakistani worker remains trapped in a cycle of low wages, job........

© Dawn Business