- The populace of 241 million in Pakistan experienced unprecedented inflation rates in 2023, with the country’s currency plummeting to never before seen lows.
- The dire economic situation was temporarily alleviated in July through a bailout package worth $3 billion from the IMF, preventing an immediate sovereign default.
- In December 2023, monthly inflation statistics indicated an increase of 0.8% from the preceding month.
- Future forecasts by the Central Bank Governor predicts that Pakistan’s inflation will settle around 20-22% for the 2024 fiscal year, this information comes at a crucial time with national elections on the horizon.
- Last year’s Consumer Price Index (CPI) escalated dramatically to hit 29.2%, a notable push towards the upper limit of the bank’s revised predictions.
- The Central Bank has expressed a determination to achieve a 5-7% medium-term target to keep inflation expectations grounded.
Inflation Crisis Hits Pakistan
Pakistan, with a population of over 241 million, suffered its highest ever inflation in 2023. The country’s currency touched historic lows until a $3 billion International Monetary Fund (IMF) bailout prevented a looming sovereign default in July.
December Inflation Statistics
Data for inflation in December showed a growth of 0.8% compared to the previous month’s figures.
On Friday, the Governor of Pakistan’s Central Bank released a report specifying that the inflation figure is expected to decrease and stabilize around 20-22% for the financial year 2024. This report holds great importance as it is released just weeks before the upcoming national elections, which are anticipated to bring political and economic steadiness.
The Role of the Central Bank
Pakistan’s Central Bank head, Jameel Ahmed, stated in the report that the nation’s Consumer Price Index (CPI) soared to 29.2% in 2023, nearing the top end of the bank’s revised projections. He emphasized the bank’s commitment to keep inflation expectations controlled and reach its medium-term target of 5-7%.
The instability of the inflation rate and the economic situation in Pakistan could have potential implications for trading, particularly forex, and could impact the valuation and trading of assets linked to the Pakistani economy.