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The Misery Index

January 26, 2024 at 2:10 pm | Economic Affairs

The Bloomberg Economics report comes as a significant boost for PML-N, enhancing its image as a competent economic manager.

By Qamar Bashir

The Bloomberg Economics report, lauding the Pakistan Muslim League-Nawaz (PML-N)’s economic management, comes at a critical time as Pakistan faces severe economic challenges.

With the country in the throes of a financial crisis, marked by soaring inflation of 20-25% and an unemployment rate above 8%, the populace is burdened and seeking immediate relief.

This backdrop has triggered a wave of extravagant election promises from various political parties, including free electricity, doubled salaries, free housing, transport, petrol, and gas.

However, these promises often lack a concrete and rational economic roadmap, raising questions about their feasibility in the current economic climate. This situation positions the PML-N’s acknowledgment by Bloomberg as a notable endorsement of their past economic governance, potentially influencing public perception and electoral decisions in these trying times.

The report had employed a ‘misery index’ tailored for Pakistan, which combines unemployment and inflation rates, to evaluate economic performance. This index showed the PML-N with a score of 14.5%, indicating less economic hardship under their rule compared to Imran Khan’s Pakistan Tehreek-e-Insaf (PTI) at 16.1% and the Pakistan Peoples Party (PPP) at 17.2%. The scores represent averages during the periods each party has been in power since 1990, with a lower score suggesting better economic management.

The “misery index” is an economic indicator created by economist Arthur Okun. One of the main advantages of the misery index is its simplicity, which makes it easy to calculate and understand. However, this simplicity also means it might not capture the full complexity of an economy’s health. While the misery index provides a quick snapshot of economic conditions, it’s not a comprehensive measure. Its findings can vary significantly if other factors are included, offering a more nuanced view of economic well-being. For detailed economic analysis, it’s often necessary to look beyond the misery index to a broader set of economic indicators.

Notwithstanding its shortcomings, this report has indeed impacted the election campaigning for every stakeholder including PML(N), PTI and PPP, and has generated media and public discourses.

The Bloomberg Economics report comes as a significant boost for PML-N, enhancing its image as a competent economic manager. It reinforces PML-N’s appeal to voters seeking a party with a proven track record in economic governance. This development, coupled with the return of Nawaz Sharif and the diminishing influence of PTI, places PML-N in a favorable position, potentially influencing voter preference in the face of the nation’s economic challenges.

For the Pakistan Tehreek-e-Insaf (PTI) and the Pakistan Peoples Party (PPP), this report could be a hurdle. Its comparative analysis places these parties in a less favorable light in terms of economic management. This could lead to increased scrutiny of their past performance and promises for future economic policy.

It has influenced the public opinion and voter behavior. In a scenario where economic management is a top voter concern, a report suggesting one party has a better track record could sway undecided voters. This might lead to a shift in the electoral battleground, with economic policy becoming a central theme of the campaigns.

Since its publication, the report has become a hot topic in media discussions and public debate, potentially shaping the narrative around the elections. Almost every big and small TV channel ran stories on this, soliciting comments from the economic and financial experts. Every anchorperson of prime time talk shows mentioned it as a positive omen for PML(N).

How each party responds to this report, and how they leverage or defend against it, could be crucial in the days leading up to the election potentially shaping the narrative around the elections.

In light of Pakistan’s dire economic situation, the Pakistan Muslim League-Nawaz (PML-N) should capitalize this report by finetuning its election campaign with a focus on realistic and responsible promises. The party needs to emphasize its proven economic management skills while transparently communicating the severity of current economic challenges, including the country’s high debt, inflation, and sluggish growth.

The campaign should pivot towards proposing long-term, sustainable economic strategies and structural reforms, particularly in the energy sector and state-owned enterprises. Engaging economic experts and emphasizing the development of robust social safety nets to protect vulnerable populations will be crucial.

Additionally, a focus on improving international relations and trade to attract foreign investment and bolster foreign exchange reserves is vital. By adopting this multifaceted approach, PML-N can position itself as a party capable of guiding Pakistan through these challenging times while retaining public trust and support.

Rival political parties in Pakistan, in response to the Bloomberg report favoring PML-N, can craft a cohesive counter-strategy by critically analyzing and questioning the report’s methodology and relevance to current economic challenges.

They should highlight the pressing issues of high debt, inflation, and unemployment, and present comprehensive, forward-looking economic recovery plans that prioritize transparency and accountability. Emphasizing on addressing immediate public concerns, such as rising living costs and job scarcity, through grassroots campaigning and effective use of media and public debates, can resonate more with voters.

Additionally, focusing on diverse governance aspects like social development and foreign policy, and leveraging social media for wider outreach, especially among the youth, can strengthen their position. Forming coalitions and alliances can also offer a united and formidable alternative to PML-N, emphasizing current solutions over past achievements.

Amidst the political maneuvering following the Bloomberg Economics report, Pakistan’s stark economic realities remain unchanged and pressing. Political parties, while vying for public favor, must ground their promises in these realities: the daunting $126 billion national debt with a $25 billion repayment due in 2023-24, meager reserves of about $8.8 billion, and significant circular debts in electricity and gas sectors. Additionally, they must consider the soaring inflation rate at 25%, the substantial depreciation of the Pakistani rupee, critically low foreign exchange reserves bolstered by external deposits, a tepid GDP growth rate of 1.7%, barely surpassing the population growth rate, and a worrying 8% unemployment rate.

In this challenging economic landscape, electoral promises need to be carefully calibrated and responsibly aligned with the nation’s fiscal and economic capacity.

The writer is the former Press Secretary to the President of Pakistan, former Press Minister at Embassy of Pakistan to France and former MD-SRBC.

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