The shops in Karachi’s famous market streets remained empty even though it is the biggest shopping season of the year. It is customary for even the less affluent Pakistanis to shop for new clothes before the Eid-al-Fitr festival.
This year, however, most of the Pakistanis in middle and lower-income groups abstained from shopping. Even the professional class with its stable income is cautious about spending this year.
The inflation touched 35% in March with Pakistan’s currency depreciating in value. These two factors have had a disastrous consequence on what is primarily an import economy. The government until recently was cutting the power supply to its main cities in a bid to contain fuel consumption. This is the fuel that Pakistan imports to keep its power turbines running.
The government of Pakistan was forced to roll back subsidies as it struggled to secure a $1.1 billion bailout package from the IMF. These measures have made the conditions worse for the poor as they struggle to get basic necessities. Food inflation has been as high as 47 percent.
The dire state of the economy is evident from the empty shops on Karachi’s famous shopping streets. The shopkeepers noted that there had been a 20% drop in sales across all categories except women’s clothing. Many shopkeepers consider themselves lucky if they break even during these testing times. Others are happy if they earn the bare minimum and are able to afford a proper meal for the day.
Pakistan’s government has speculated 2% economic growth this fiscal year. However, the World Bank slashed the growth projections in April to a realistic 0.4% for this year.
