Wednesday, 7 February 2018

What is the main cause of inflation in Pakistan right now?

An
increase in demand and debt have contributed to the rapid inflation of Pakistan's economy. That
does not mean negative debt, necessarilyit is simply a measure of how much money businesses and
individuals are allowed to borrow, infusing liquid capital into the economy. By doing this, the
supply of money ostensibly grows, allowing for greater purchasing power, but eventually causing
prices to rise to an equilibrium at a product's fair value.

The increase in
demand is largely due to a population increase, as Pakistan is experiencing rapid growth
annually. For a relatively small country, several million people annually becomes a large
percentage, and this spurs a demand for numerous goods. This demand will in turn increase
prices. That increase, coupled with the influx of capital from exports and debt, has created a
dramatic inflationary process.

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