Pakistan's inflation to go up, needs to be managed, says Moody's economist

Pakistan is currently facing one of its worst economic crisis in history, with inflation levels soaring and the country desperately seeking a bailout from the International Monetary Fund (IMF). In an effort to secure a $7 billion extended fund facility, the Pakistani government has taken unprecedented measures, such as hiking petrol prices to 272 Pakistani rupees per litre and diesel to 280 Pakistani rupees per litre. These moves are aimed at appeasing the IMF and reducing the country's deficit.

According to Steven Cochrane, the Chief Economist at Moody's Analytics, there is a good chance that inflation in Pakistan will rise even further as petrol prices continue to increase. Cochrane warns that the inflation rate could rise to over 30 percent in the first half of 2023, but there is hope for the second half of the year if the government follows austerity and good monetary policy.

“2023 is a going to be a tough year for Pakistan. The first half of this year is going to be very difficult in general and there is a good chance that inflation will rise further as the price of petrol is going up. So there is a good chance that inflation rate could rise to something over 30 percent in the first half of the year. The second half of the year will look better if there is very stable monetary policy and continued austerity on the fiscal side of policy making,” Cochrane said.