Cracks in the edifice
IT is not yet clear how deep and how sustained they are, but cracks are now appearing in the edifice that is the hybrid plus regime running Pakistan these days. This is a natural consequence of the cul-de-sac where the economy is now parked. In the early months of 2025, Pakistan hit what I called “peak stability”, which was a state of affairs where the economy had been stabilised, its debilitating deficits bridged, inflation extinguished. The big question at the time was what
Pakistan's current economic management strategy, characterized by a "hybrid plus" regime, is showing signs of strain. Initially achieving a period of "peak stability" in early 2025 with controlled deficits and inflation, the economy now faces challenges transitioning towards sustainable growth. The government's ability to generate revenue and foreign exchange is being tested, impacting political stability and the coalition supporting the current administration.
The emerging cracks in Pakistan's economic and political framework highlight the difficulty of sustaining a low-growth stability without a clear plan for future expansion, potentially leading to further instability.
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