Is this economic stability sustainable?

Pakistan’s recent economic turmoil, which nearly pushed the country to the verge of bankruptcy last year, seems to have given way to a period of stability. However, a crucial question remains: is this a precursor to a genuine economic recovery, or a temporary respite? There has been a noticeable decline in inflation from its peak last summer, coupled with stability in the Pakistani rupee, which is now hovering around Rs280 against the US dollar. Additionally, the current account deficit (CAD) has also narrowed, offering respite to the pressured forex reserves. The expectation of political stability under a new government after a gap of almost two years gives one a glimmer of hope for a brighter future. Yet, it’s critical to scrutinise the looming economic risks as well. Despite some positive developments, it is important to understand whether the economic stability seen under the caretaker government was the result of any significant or bold reforms that have solidified Pakistan’s financial foundation.