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• Think tank says govt’s increasing reliance on borrowing from banking sector crowding out private investment
• Seeks policy shift to economic freedom, from reactive ‘stabilisation’ required by International Monetary Fund
ISLAMABAD: Pakistan’s nascent macroeconomic recovery, which began in 2025, is stalling due to the geopolitical situation, leading to rising inflation and reducing the monetary freedom of individuals and firms in an economy where around 80pc of the labour force operates in the informal sector.
“The macroeconomic recovery that began in 2025 is stalling due to geopolitical obstacles. CPI inflation re-entered double digits at 10.9-11.7pc between April and June, with the SPI climbing to 12.8pc by June, reducing the monetary freedom of individuals and firms,” said the Policy Research Institute of Market Economy (Prime), a private think tank, in its report for July 2026.
