By Sardar Khan Niazi

In recent months, Pakistan’s economic debate has all the time more centered on inflation and its consequences. Much has been said about its impact on purchasing power and social unrest, but what often escapes the public eye is the crucial link between inflation control and long-term economic growth. It is not merely a matter of keeping prices low to ease public pressure. The deeper issue is that sustained inflation, especially when unpredictable, messes up the very mechanisms that drive growth: investment, savings, and productivity. Over all, countries that have kept up moderate and stable inflation have outperformed those with persistently high or erratic price levels. The reason is simple. When businesses and family units are uncertain about yet to come costs, they delay investment decisions, adopt a short-term frame of mind, and steer capital away from productive activities. In such an environment, economic spreading out is stifled before it even begins. Pakistan’s recent inflationary trends–driven by energy price hikes, currency devaluation, supply shocks, and global commodity pressures–have deeply affected consumer confidence and investor sentiment. The State Bank of Pakistan (SBP) has responded with a tight monetary policy, raising interest rates to curb demand and to make the rupee stable. While painful in the short term, such steps are necessary for long standing macroeconomic stability. The correlation between inflation control and economic growth becomes more evident when we look at the East Asian economies. Countries like South Korea, Taiwan, and Malaysia kept up tight reins on inflation during their stages of critical growth. This not only preserved the value of savings but also encouraged investment in infrastructure, technology, and human capital–key drivers of sustained growth. Pakistan’s own history offers insights. In periods where inflation was kept under check–such as the early 2000s–the country experienced higher growth rates, greater investor confidence, and lower........

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