Faltering consumer demand.

Byline: Afshan Subohi

Political, economic and psychological factors have collectively put pressure on the Pakistani consumer, reputed to be the most resilient and liberal spender in the region.

The obvious outcome is falling consumption.

The marked weakening of aggregate demand a key economic stimulant that survived the testing times of political turbulence and violent militancy is disquieting for businesses and economic observers.

The State Bank of Pakistan (SBP), which monitors consumer sentiments closely, was not perturbed. When reached for comment, sources in the central bank confirmed that consumer demand has indeed crashed. But they saw it as a sign of success of policies aimed at cooling down the overheated economy.

In a statement explaining the consumption story, SBP Chief Economist Dr Saeed Ahmed told Dawn: 'Contractionary monetary policy is one of the factors and the impact of a cumulative 500-basis-point increase in the policy rate over the current fiscal has started to unfold.

Consumer demand has crashed, but central bankers see it as a sign of successful policies aimed at cooling down the overheated economy

'Other...