Up the creek.

SELDOM before in the past few decades have I heard Pakistanis - friends, students, colleagues, acquaintances and even strangers - sound so despondent and negative about the future of the country as I have over the last few months. The economic situation has been tough for a few years now. But the mood over the last year or so has really turned sour. And continues to be so.

The economic situation is bad. Inflation is hurting everyone. The economy is stalling, new jobs are not being created and existing jobs are being destroyed as manufacturing and even the services sector take a hit because of the slowing economy.

Much of the discussion on the economy has focused on the issue of whether or not Pakistan will default. The opposition and many others say that it will. Government officials say it won't, and even threaten people with legal action if they spread 'rumours' that it will. But that is not the real issue. Given that default is being discussed, irrespective of whether it happens or not, we are clearly in a bad enough situation where the possibility has become real. The state of the economy, more than any single action or outcome, is what is hurting the people. For most citizens, the question of whether or not Pakistan defaults is a mere technicality. If inflation stays where it is, if the savings rate remains negative, if jobs are not being preserved and new ones not being created, does the issue of default or no default make a difference to the ordinary citizen?

A friend who had retired about 10-odd years ago told me recently that he has had to come out of retirement and look for work opportunities as inflation over the last few years has eroded his savings to the point where his retirement plans are no longer tenable. He realises that even though he is willing to start at a reasonable salary, much lower than the one he was drawing when he retired, finding a job at his age will be very hard. But he does not have much of an option. He has also had to tell his children that where previously he was willing to fund even their graduate studies, he can now only support them during their undergraduate course.

What is new is that even fairly well-settled business families have been moving assets out of Pakistan.

But my friend is still one of the more fortunate ones, with savings that have helped him maintain a decent lifestyle. For the majority of Pakistanis, who earn less than Rs50,000-Rs60,000 a month, the inflation of the last few years has...