An overview of the economic crisis and inflation in Pakistan for the week ended on 24th March 2023
The dollar reserves with the Central Bank increased to the level of 4.6 billion amid the release of Chinese commercial loan installment
The foreign exchange reserves with the State Bank of Pakistan increased by USD 280 billion to the level of USD 4.6 billion during the week mainly due to the inflow of Chinese commercial loans of USD 500. The overall foreign exchange reserves in the country rose by 2.3% to USD 10.14 billion which is the highest level since the mid of January this year. The country is facing a serious economic crisis after covid and especially the political unrest in the country for the past year.
The staff-level discussions for the IMF bailout package for Pakistan are still underway causing delays in the release of the installment of USD 1.1 billion which is putting a negative impact on the economy of the country. The discussions are linked with the condition of raising USD 6 billion from other friendly countries to fill the financing gap in the balance of payments.
The current US Dollar rate in Pakistan is at an all-time low level and is trading at PKR 283. The acute shortage of FE reserves compelled the State Bank to put restrictions on the imports which has affected the overall industry of the country badly leading to economic crisis and inflation in Pakistan. SBP has asked the importers to arrange dollars on their own to mature the imports. The importers are buying dollars from Dubai at PKR 324 which is further putting pressure on the overall costs.
The Sensitive Price Indicator (SPI) increased to 250.66 basic points with an increase of 1.8% week on week (WoW)
Pakistan Bureau of Statistics issued a report on Friday 24th of March 2023 according to which the Sensitive Price Indicator (SPI) increased to 250.66 points from 246.22 points recorded last week showing an increase of 1.8% Week on Week (WoW) mainly due to an increase in prices of many food items as per following detail:-
The increase in prices is mainly due to the start of the month of Ramadan raising the demand for commodities coupled with the overall inflation due to many factors in the past months including high transportation costs, devaluation of the Pakistani Rupee, raised taxes, etc.
The Year on Year (YoY) analysis of the inflation shows an increase of 46.65 percent which was due to an increase in prices of the items as shown in the following table which is based on the data published by the Pakistan Bureau of Statistics (PBS):-
The current rate of inflation in the country is the highest since 1965.
Well summarized 👍