Macroeconomic Brief No. 2

Pakistan’s economy has been hit hard by the triple blows of devastating floods, crippling energy shortages, and fragile domestic security situation. Economic growth remains anemic, inflation is stubbornly high, and public finances are in disarray. Worse still, macroeconomic stabilization policies are not working, not least because of a lack of coordination between monetary and fiscal policies. What is more, policy reversals and procrastination on vital economic issues¾signs of a lack of political consensus¾have only added to the prevailing uncertainty with adverse consequences for consumer and business confidence. In this scenario, restoration of macroeconomic stability and revival of economic growth have become serious challenges. Urgent, decisive and bold steps are needed to put the economy on the path of sustained recovery with a stable macroeconomic environment and robust growth.