LAHORE - The businessmen on Wednesday urged the government to take immediate measures to stop fast galloping inflation that has touched high double digit and is causing deceleration of economic growth.
They said that the recent upsurge in inflation was not only damaging the government’s reputation but the resultant economic slowdown was likely to jack-up the graph of unemployment.
The LCCI President Suahil Lashari said that the high inflation is a double-edged sword as on the one hand it hits economy hard while on the other results in a rise in crime rate. “The double-digit inflation in a country where up to 40 per cent of its 180 million population lives below poverty line will push more people below the poverty line in the absence of any significant economic activity.”
He said that the real force behind the running inflation was food prices, particularly prices of perishable food items. Therefore, he said, the government should divert its attention to bridge demand-supply gap by ensuring food security. The LCCI President said that the central bank’s tight monetary policy could not tame the soaring inflation while it did stagnate the economic growth. Rising inflation has not only raised the credit price but also eroded the purchasing power of the people. Further monetary tightening is expected in upcoming monetary policy.
The State bank of Pakistan in November increased its discount rate by 50 basis points to 10 per cent which was its second consecutive rate rise aimed at curbing persistent inflation and further monetary tightening would mean closure of more industries and more job cuts.
The tight monetary policy has not allowed the private sector to play a key part in growth.
High borrowing costs discouraged the demand for private sector credit, which in turn decreased private investment adversely affecting the prospects of economic growth.
He said the State Bank of Pakistan should ascertain the factors weakening the value of rupee and check the possibilities of undue speculations. This will help stabilize rupee and restore the confidence of the business community.
He said the government should take immediate measures to arrest further devaluation of rupee to avoid more damaging consequences for the economy.
He said though the weaker rupee benefits the exporters by giving them more rupees per dollar, but this benefit is neutralized by the costly imported inputs of manufacturing sector thus eroding the financial advantage of a weaker rupee.