The current political situation and its impacts on the economy.

 Politics and economy are inseparable. The economy of a country is directly impacted by the political condition of that country. Recently Covid-19 has hit the economies of the world and still, countries are striving to normalize their economic conditions. Pakistan’s economy has been dwindling for a long time mainly because of political instability. So, this struggling and pandemic-hit economy’s condition has been further aggravated by the current political situation. Given the fact that political instability in the country seems unprecedented, its impact on the economy of the country is not dubious. In Pakistan, the major issue is the inconsistency in policies as no Prime Minister in Pakistan completed his tenure. The same thing happened now as a government was ousted and a new government came into power. With this development, all the policies of the previous government are being reshaped by the new government.

 

Normally, Pakistan has to borrow loans from IMF and other money lending institutions and countries to meet its expenditures. The loans and the interest of that loans are increasing day by day which has become another major issue for the country. Recently, the incumbent government has to increase the prices of petroleum products and electricity prices to meet the conditions and to get more loans from the International Monetary Fund (IMF). Fluctuation in petroleum prices has a direct impact on the economy as each sector is linked with petroleum prices in the country. In a short period, the government has to increase the prices of petroleum products and electricity, which has uncountable implications on the economy of the country. Further, the value of the Pakistani currency is constantly decreasing which is contracting imports of the country and making imported products costly.

 

Inflation.

 

With the recent move of the government, the country’s headline inflation based on the consumer price index (CPI) has increased by 13.8% in May 2022 on year on year bases according to the Pakistan Bureau of Statistics. People’s suffering can be measured by this hike in inflation. Inflation raises the prices of commodities which means purchasing power of people decreases. It also limits the investment potential of people. Although the real estate sector is considered an inflation hedge, still people who are involved in this sector suffer from inflation.

 

Foreign Direct Investment.

 

When there is political unrest in a country and economic conditions are worse, foreign direct investment (FDI) in the country decreases. Foreign investors need favorable conditions such as political stability, cheaper labor, tax amnesties, and cheaper electricity and gas. But, given the current conditions, the political situation is worse, with the hike in inflation, labor will be costly, and electricity prices have already been raised. So, these things will decrease the confidence of investors which will ultimately decrease foreign direct investment (FDI). For example, if a foreigner wants to invest in Nova City Peshawar, he might be reluctant to proceed with his investment in Nova City Phase 1.

 

Impacts on Industry.

 

The industry of a country needs a favorable conditions to thrive and generate revenue for the country. But current situation seems unfavorable to the industrial sector. With the rise in petroleum and electricity prices and especially the increase in load shedding, the growth of the industrial sector is stagnant now and this trend might increase unemployment in the country.

 

Agriculture.

 

The agriculture sector is deemed the backbone of the country. Although, this sector was largely ignored by the various governments this hike will have severe impacts on the agricultural sector. Fertilizers and pesticides price will further increase and farmers will have to suffer further as it could damage buying capacity, especially for small farmers.

 

No doubt, the economic condition of the country is dire and if political unrest prevails further, the economic condition of the country will be further terrible. There should be consensus-based, consistent, and long-term policies in the country to boost the economy of the country. Political unrest must be ended to sustain the economy and advance HDI.

 

Record Marketing has taken up this opportunity to guide and provide you with the finest information about Nova City Housing Society Peshawar in a bid to ameliorate the standard of living in our country.