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By Taha Anis Published: September 3, 2014

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The Verdict
How the twin-marches in Islamabad are affecting our
economy
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The decrease in inflation must have turned a few heads though; until blood and tears continue to flow in Islamabad, the
economy shall not.
Bang!
The first bullet shot in Model Town echoed through the streets of Lahore. We may never know what was
going through the mind of the man who pulled that trigger or through the mind of the one who
authorised it, but what followed was one of the most dramatic domino effects in the countrys recent
history. Although Imran Khan will probably insist that it also has something to do with election rigging.
Tahirul Qadris second coming, the twin marches on Independence Day and the sit-ins since then, resignations in the
assemblies, the march into the Red Zone, the use of force by the government as protesters barged into PTV and attempted
to enter the PM House, and amidst it all, the fear of martial law and hushed whispers of agencies and foreign powers.
Perhaps in the pages of history, decades down the line, this may all seem like a crumbling deck of cards but at the
moment, they are all separate incidents, one after the other, an ominous line of falling dominos hurtling towards an
uncertain end. However, in all this turmoil and chaos, there seems to be a silver lining inflation is lower than what it
has been for a while, at only seven per cent in August.
Look closer though and it may not be a silver lining but the reddest of all the dominos; the straw that may finally break
the camels back.
On the face of it, lower inflation seems to be a good thing as purchasing power remains relatively steady in these
uncertain times but inflation is a necessary evil. To understand this, one must look at how inflation works in an economy
and how it may be indicative of progress.
In times of a boom the economic term used for a thriving economy more people are being employed. Since more
people are working, they have more money to spend. As people spend more, further venues of employment open up. This
becomes a positive spiral that essentially feeds itself. However, as more and more people are employed and have the
power to spend, demand exceeds supply. This, in turn, drives up the price, hence leading to inflation.
In times of a recession the economic terms for a troubled economy the opposite spiral comes into effect. Employment
decreases and so does spending power. This means that companies will then have to make cuts as sales decrease, which
leads to further unemployment. The vicious cycle tends to cripple an economy, supply exceeds demand and hence
inflation decreases.
To counter these two spirals, as neither can go on forever, the government manipulates the interest rates to manipulate
investment (a high interest rate would mean that keeping your savings in the bank is a good choice due to the high rate of
return but a low interest rate means taking a bit of risk and investing somewhere may be the better choice). An increase in
investment means more revenue for companies, allowing them to employ more and the cycle starts all over again.
However, the Karachi Stock Exchange has been brought to its knees and in these uncertain times, investment has stopped
as people wait for the crisis to blow over before spending or investing again. This further decreases inflation in the short
term but may have a crippling effect on the economy if allowed to continue.
In a country like ours, riddled by internal and external debt, inflation may also mean reprieve as the purchasing power of
the debt, and its interest, decreases.
While a one-month decrease in the rate of inflation may not yet herald panic mode, it is still a cause of worry due to its
timing; one cannot possibly believe that it has been brought about by a positive market balance, especially considering
that the real-estate industry of Punjabs finest has come to a standstill. Neither is Pakistan going towards a Japan-esque
deflation where the economy crumbles as demand, wages and price all come crashing down.
But the omens do not bode well.
Ordinary lives are being lost but the countrys high command never did care about ordinary lives. The decrease in
inflation must have turned a few heads though; until blood and tears continue to flow in Islamabad, the economy shall
not. Something has to give, so if it keeps on raining the levees going to break.
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Taha Anis
A Sub-Editor at The Express Tribune.
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The views expressed by the writer and the reader comments do not necessarily reflect the views and policies of The
Express Tribune.
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Zeeshan 2 days ago
I'd rather be interested in reading more about how 65 years corruption affected our
economy rather than how 20 days of fighting for people's rights has affected our
Favorite

67k Like
Reply
economy rather than how 20 days of fighting for people's rights has affected our
economy! If you have to be fair in your analysis, there are a lot more qualitative aspects
to consider rather than just the short-term monetary impacts. The debt level that you
talk about was already overblown by the honourable government way before the
dharnas started. We need to look beyond the current crisis and think about the long-
term.
God Bless Pakistan!

6


Reply
Syed Mubeen Hussain Sabzwari 2 days ago
killings r not affecting our economy? don't give rights to a common man and that's not
affecting anything? we need to change this system

4


Reply
Saad 3 days ago
Very ignorant and lack of research.
Economic growth do not necessarily correlate with inflation and vice versa. Inflation is a
sympton, not a cause
You said troubled economy leads to low inflation. Then tell me why is Pakistan's
inflation rates the highest from 2008-2010?
You say lower stock exchange investors lead to lower inflation rates. Yet again, its false.
If anything low inflation rates should have higher investors since costs are low and that
will lead to higher profit return. However even that is debatable

4


Reply
Waheed Islam a day ago
Money, money, money, money. Is that all we can think about? I think we must leave a
bania mentality. Sorry, but the Prophet (pbuh) taught us about fighting shirk, making
sharia and creating an islamic caliphate. Isn't Qadri promising all that? Right?

1


Reply
Saad 17 hours ago > Waheed Islam
In a Pakistani interview he claims he takes full credit and responsibility on
Pakistan's blasphemy law, which btw is made without any islamic basis. In a bbc
interview, he denied any responsibility in regards to Pakistan's blasphemy law
and in addition to that he said he always opposed it. Do I think Qadri will
promise a sharia and islamic caliphate? No


Reply
Waqas Ahmad 2 days ago
Mr Taha Anis what about the corruption and inability of the rulers who are ruining this
country for many decades???

1


Dr Dang 3 days ago
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MrRollsRoyce Faraz, thank you for
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Queen A much needed blog. PTI should
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34 comments 2 days ago
Faulitics "But the men and women who
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koshur_batta well then, you shouldn't be
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Dr Dang 3 days ago
Using simple English you explained how the economy works, well done.

1


Reply
siesmann 15 hours ago
Now the dharnas and their leaders have scared china's president from comintg to
Pakistan,a possible loss or at least a delay of over 30 billion dollars investment. Naya
Pakistan is here,and will be a bankrupt one.


Reply
Moiz Omar a day ago
I'm not a PMLN supporter but these marches are really bad for our economy. They
should stop.


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