Thirty odd percent of Pakistanis were officially living below the poverty line a few years ago. But these figures were contested by many who thought a higher percentage was poor and the government poverty line was too stringent and its data too unreliable. Even at that time, the debate on poverty figures notwithstanding, it was conceded by all that a huge number of Pakistanis were living around the poverty line even if just above it, inequality had been increasing in the country, and more than two thirds of Pakistanis were significantly vulnerable to falling into poverty. All of the above were true when the economy was growing at more than 6 percent per annum and the government spokespersons were going hoarse talking about the expected takeoff. In the last couple of years we have seen inflation stay at about or above 10 percent, food inflation go crazy and on a sustained basis, significant increases in the price of petrol and other forms of energy, increases in prices of most other goods, increase in interest rates, fall in the value of rupee (almost 25 percent in the last few days), and a slowdown in the economy as well. Nobody is talking about growth anymore, and of course, if there is no growth one cannot talk of employment generation either. In fact, in the last few months the decline in things has becoming quite alarming. Food prices have been accelerating instead of just increasing. Sustained high prices of oil are not only causing prices of transport and other forms of energy to increase, they are causing prices in almost all other sectors to increase as well. And despite the dollar gaining significantly in value, it has been difficult to get dollars in the open market. Officials at the State Bank of Pakistan or the ministry of finance cannot be happy campers at the moment. What kind of effects are the recent price hike and the economic slowdown going to have on the poor and those who were already vulnerable? Clearly not positive. The changes that have taken place in the last couple of years are going to drive a significant number of people into poverty, turn the life of the poor even harder, and make an even larger number vulnerable to poverty. Poor spend the major portion of their income on food (Engels Law). The recent inflation has been very cruel since it has mainly been driven by food inflation and energy price inflation. How can the poor avoid this? But if they were spending most of their income on food previously also, and were barely getting enough food, how would they be able to afford the recent increases. This inflation would force them to adjust their budgets in ways that would make the medium to longer-term sustainability of their families unmanageable. Those who were poor, even before the recent inflation, were cutting their other essential expenditures " on health, education, skill acquisition, savings, and so on " to ensure they could keep their families alive. With the inflation they are going to be pushed even further. But many had no leeway for adjustments. If they are not going to be able to make adjustments, what will happen to these people? Clearly they will be a desperate people. Similarly, many of those who were vulnerable but were a little above the poverty line will with the recent inflation be pushed into poverty. They will cut other expenditures to keep food intake at a minimum acceptable level. But if cuts happen in their or their children's education, health, skill acquisition or savings, this will limit their future incomes and well-being. If people have to withdraw children from school as they cannot afford to pay fees, or books and uniforms, if they have to put children to work earlier, if they have to withdraw girls from school, if they cannot send their children to colleges or technical schools, if people avoid going to medical facilities or delay it, if they ignore ailments when in the early stage, all of these decisions " though inevitable and easy to understand when one is trying to have enough to eat " will limit the growth of these individuals. And of course, if a sufficient number of people suffer, as is the case where one-third of our population is poor and two-thirds is vulnerable, Pakistan's progress and growth will be badly impacted. If we have people who are sick, or illiterate or less educated, or less skilled, they will not be able to contribute as much to the country's growth as they potentially could. The country will suffer as a result. It is the suffering of the families that is of more concern to us in this article. Extremes of poverty can be very damaging for the physical well-being of the people who undergo it as it can mean malnourishment, lack of proper medication and care, but it can also leave extremely destructive scars on the psyche of people. Poverty can make people desperate, estranged, angry, and, if poverty is severe enough and long enough, it can make people lose hope as well. And though hope goes last, if hope goes, all is lost. When people get estranged or angry, they can withdraw from the society in one way or the other, and if they feel they do not have a stake in the country or the community anymore, they can choose to do things that under normal circumstances they would stay away from. Desperate people can commit crimes themselves and can become grist for people who want to create havoc on a society. Similarly, if people lose hope, they can commit acts of violence towards themselves, their loved ones, and the rest of the society. Those who become burglars, dacoits, assassins, and murderers have many in their ranks who were pushed by desperation. It is not being argued that every person who breaks the law was poor and desperate, or that every poor or desperate person will turn into a law-breaker, but what is being established is a link between poverty and a propensity to get involved in desperate acts, willingly or unwillingly. Similarly, anger can combine with desperation in many ways. Could angry people without much hope be more susceptible to propaganda from ideologues of various sorts? Could any of the suicide bombers be from such a group? Hopelessness can result in the person turning on himself or herself and/or his/her family. Could the suicides that we hear about almost everyday now have anything to do with the desperation of poverty? And if there is a connection between suicide and poverty, how can there not be connections between poverty and violence, and poverty and terrorism. The consequences of extreme and sustained poverty, for an individual, a family, and a community or a nation can be devastating. Poverty was a grave problem for Pakistan even prior to the recent inflation. But over the last year or so, the problem has become much more serious and larger. If the trend continues and we are unable to: a) assist the people who are currently in trouble, b) find vents for growth and employment generation, and in large enough numbers, we are heading for bigger trouble. The poor will suffer tremendously but they will not be alone. The entire nation will suffer, and not just in terms of achieving slower growth, development and/or recovery, but in terms of peace and security as well. The impending storm, if it is not managed, has the potential of destabilising the country completely. A number of commentators have recently argued that macroeconomic stability should be the first priority of the current government, apart from the restoration of the judges. There is no doubt that macroeconomic stability is important, and might be a pre-requisite for sustained growth. But it is also the case that usually governments take macroeconomic stability as the end in itself. This is a mistake. Macroeconomic stability is required for sustained growth. But if a large number of people are becoming poor and desperate, no amount of macroeconomic stability will be able to bring sustained growth and prosperity. The experience of the last 8-10 years should be enough to teach us that. What is needed is a direct attack on poverty, with a reasonable path for achieving macroeconomic stability. We need immediate and undivided attention on poverty reduction, poverty mitigation, and reduction of vulnerability, while keeping certain limits concerning macroeconomic stability. If we go for stability only, leaving the poor to fend for themselves, at best we will create the kind of bubble we have just seen bursting, and, at worst, it will turn the nightmares mentioned above into a reality. The writer is an associate professor at LUMS and an economic analyst E-mail: faisal@nation.com.pk