Government borrowing, rather than monetary expansion, is emerging as the main driver of persistent price pressures.
Image: Asia Times
Pakistan’s inflation has remained significantly higher than China’s, reflecting deep structural differences in the two economies. Analysts say heavy government borrowing, rather than monetary expansion alone, has become a key factor behind sustained price increases.
Large fiscal deficits financed through domestic borrowing have increased pressure on interest rates, private investment and overall economic stability. Economists argue that these imbalances have contributed more to inflation than changes in the money supply.
In contrast, China’s relatively stronger fiscal position, stable production capacity and tighter control over supply chains have helped keep inflation subdued. Experts say Pakistan will need fiscal discipline and structural reforms to achieve lasting price stability.
