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       Source: SBP via Karandaaz

       Pakistan’s economy is sending contradictory signals. The stock market is doing well, but large-scale manufacturing is not. Inflation is at a record low, but the interest rate was not cut in the last monetary policy meeting. The current account is afloat, but driven by record-high remittances rather than exports.

       Most of these indicators do not reflect the ground reality, where about 40 per cent of the population lives below the poverty line. A bull run in the stock market does not mean more jobs in the economy. A low inflation rate means prices have stopped rising, not that people can afford essentials. Rising remittances are more a result of crackdowns on hawala-hundi routes and a stable exchange rate than a testament to the diaspora earning more.

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       However, an uptick in machinery imports is an indicator that separates the wheat from the chaff. There have been two notable peaks in the last decade and a half—first, during the China-Pakistan Economic Corridor (CPEC) boom, and later, during the COVID-19 period, when concessional financing was easily available and textile orders surged as Pakistan was among the first economies to reopen.

       The rise in machinery imports could signal a shift pointing to businesses gearing up for expansion — among the first indicators of an economy that could be emerging out of stabilisation.

       Published in Dawn, The Business and Finance Weekly, March 17th, 2025