Pakistan’s recent economic narrative is built around the idea that the country has finally entered a phase of stabilisation. Headline indicators appear encouraging: the IMF review cycle has remained on track, inflation has slowed from its earlier peaks, the Pakistani rupee has avoided the sharp volatility seen in previous years, and the Karachi Stock Exchange has reported record gains. These developments collectively create the impression that the worst is behind us. However, when the same economy is viewed from the perspective of households, industries, and small businesses, it becomes clear that stabilisation has not converted into meaningful relief. The divergence between statistical calm and ground-level pressure is now the defining feature of Pakistan’s economic landscape.
Inflation is a prime example. National CPI figures have indeed come down from the extraordinarily high levels of the previous two years, but prices have not reversed. A decline in inflation simply means the rate of increase has slowed. It does not translate into reduced cost of living. The Sensitive Price Index, which tracks essential commodities, continues to reflect elevated prices for wheat flour, rice, cooking oil, vegetables, pulses, and other daily-use items. A household that was spending Rs 20,000 to Rs 22,000 on basic groceries in 2021 now spends between Rs 32,000 and Rs 40,000, depending on family size and location. These numbers are not statistical anomalies; they are consistent across urban and semi-urban centres. The price base has shifted upward, and stabilisation has not lowered it.
Energy costs further highlight this disconnect. Electricity tariffs have been revised upward multiple times due to capacity payments, fuel price adjustments, and IMF-mandated reforms in the power sector. As a result, domestic customers in the middle-usage brackets routinely face monthly bills that consume 20% to 35% of their income. Commercial and industrial users face even higher tariffs, limiting their ability to expand operations or hire additional labour. Gas shortages and seasonal adjustments add another layer of unpredictability. These pressures directly affect the cost of production, which in turn influences retail prices. Stability at the macro level has not eased these structural cost burdens.
Until economic stabilisation translates into measurable relief for households and businesses, Pakistan will continue navigating an uneven recovery-technically stable on paper, yet operationally constrained for the majority of its citizens.
The labour market tells a similar story. Official unemployment data has not been updated with the frequency required for real-time analysis, but job postings, industry surveys, and hiring patterns indicate that formal employment has not picked up in proportion to claimed stabilisation. Large-scale manufacturing remains subdued compared to pre-2021 benchmarks. Industries operating below capacity-textiles, automotive, engineering, and some chemical segments-continue to report weak domestic orders. When industries do not operate at full potential, job creation slows, and income growth stalls. This is one of the main reasons households do not feel relief despite improved macro indicators.
The stock market’s performance is frequently cited as a sign of confidence. The KSE-100 crossing 160,000 points is indeed historically significant. But equity markets respond to expectations and liquidity conditions, not day-to-day economic well-being. A strong stock market does not automatically translate into improved living conditions for citizens. Corporate earnings in select sectors-banks, energy, and specific exporters-have strengthened, but the performance is not uniform across the production economy. Relying on market performance as a proxy for widespread economic recovery can lead to misleading conclusions.
The exchange rate is another important element. The rupee’s relative stability in recent months has helped ease panic and restore predictability in trade planning. However, this stability is supported by administrative measures, controlled demand for foreign currency, import compression, and managed flows rather than strong underlying fundamentals. Pakistan’s export base has not expanded significantly, and foreign direct investment remains well below potential. For currency stability to translate into real economic relief, it must come from productivity gains, export competitiveness, and diversified inflows-not from short-term administrative controls.
Taxation patterns further explain why stabilisation feels distant for many sectors. Pakistan continues to rely heavily on indirect taxes-sales tax, petroleum levies, withholding taxes on transactions, and utility-linked surcharges. These taxes affect every citizen regardless of income level, and they raise the cost of nearly all goods and services. While this approach helps meet fiscal targets, it places the largest burden on the middle and lower-middle segments, the very groups that constitute the majority of the population. A system weighted toward indirect taxation can strengthen government revenue, but it does not strengthen households.
The rural economy is equally critical. Agriculture contributes significantly to GDP and employment, yet farmers face volatility in input prices, unpredictable government procurement policies, and inconsistent market access. Fertiliser, seed, pesticide, and diesel costs have risen sharply over the last three years. Even when crop output is strong, profitability is affected by the high input base and market distortions. The benefits of stabilisation have not directly reduced these operating costs, limiting the ability of rural households to experience meaningful financial improvement.
Small and medium enterprises (SMEs), which account for a large share of employment, continue to face tight credit conditions. High interest rates, documentation burdens, and cautious lending practices restrict their ability to expand operations. Many rely on informal financing at higher costs, which reduces competitiveness and slows business growth. Without a vibrant SME sector, stabilisation remains concentrated in narrow segments of the economy and fails to reach the broader population.
Pakistan’s current stabilisation is not without merit; it has prevented a deeper crisis, restored some predictability, and avoided default-level disruptions. But stabilisation alone is not economic recovery. It is merely the foundation on which recovery may be built. For recovery to occur, Pakistan must shift from policies that suppress consumption to policies that expand productive capacity. That requires improvements in energy sector governance, export competitiveness, financial sector depth, and tax equity. It requires consistent decision-making, clarity in regulation, and long-term policy continuity.
The public’s scepticism toward claims of recovery is not rooted in pessimism; it is rooted in lived economic experience. A stable currency, a strong stock market, or improved fiscal numbers do not automatically lower the cost of food, electricity, transport, education, or healthcare. They do not increase wages. They do not create jobs by themselves. Until economic stabilisation translates into measurable relief for households and businesses, Pakistan will continue navigating an uneven recovery-technically stable on paper, yet operationally constrained for the majority of its citizens.
The task ahead is to convert this stability into real economic gains. That requires reforms that improve productivity, reduce inefficiencies, and broaden the country’s earning capacity. Stability without relief may protect the system, but relief with stability will strengthen the society. Pakistan’s challenge now is to move from the appearance of improvement to the experience of it.
The writer is a financial expert and can be reached at jawadsaleem.1982@ gmail.com. He tweets @JawadSaleem1982