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.

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