The present case refers to an article published on March 21, 2010 with no byline titled, “Inflation swings upward.” In this article, the author quotes several statistics from the Federal Bureau of Statistics’ Sensitive Price Indicator (SPI) for the Week Ended March 18, 2010 which can be downloaded here.

All of the statistics quoted by The Nation are based on week-by-week changes. While these are certainly interesting numbers, they are too micro-focused to be able to correctly identify a trend. It is as if a batsman hit a six, and his team was declared winning even though they were behind 272 overall. Better is to look at statistics over a period of time to determine what the trends are.

Monthly, Quarterly,and Half-yearly SPI statistics are published on page 3 of the FBS report, but these statistics were not quoted by The Nation.

Looking at these statistics presents a much different picture than what The Nation tries to paint for its readers. While there has been some increase over recent months, SPI has actually been fairly stable.

Also, SPI is only one metric in measuring economic growth. The Nation appears to have latched onto this as a convenient way to attempt to paint the present government as insensitive to the most vulnerable citizens. However, financial reporting by respected business media paint a very different picture of the economy at present.

BusinessWeek reported on March 11 that “Pakistan Inflation Slows in February for First Time in 4 Months.”

Pakistan’s inflation slowed in February for the first time in four months, giving the central bank room to cut interest rates and support economic growth.

The Nation also does not mention that the statistics that it quotes are for the week ending March 18th. In the weeks prior to this, there was no Finance Minister at the helm of the economy. It was only then that Abdul Hafeez Shaikh was named Finance Minister.

Inflation in the economy is a difficult problem to solve even for nations that are not suffering near-daily attacks from terrorist militants. The media should be presenting good information to the people so that they can make informed decisions and help government leaders to create the conditions for a prosperous economy that benefits everyone. Playing games with numbers and presenting misleading statistics is not only bad journalism, it’s bad for the country.

The Nation points to a drop in the KSE100 stock exchange index as a sign that the economy is on a decline. This is an old trick used to confuse people who don’t know a lot about economics. The fact is, stock markets rise and fall each day. If you select a day with a fall, you can say the economy is bad. If you a day with an increase, you can say its good. Does the increase in the KSE100 today mean that the economy is good? Actually, it is mostly meaningless.

A better way to look at a stock market index (including the KSE100) is to evaluate a long-term trend to see what it says about how institutional investors consider the risks and rewards of that market. Does the market show a long-term trend upwards? Or does it appear flat or (worse) headed down? Below is a one year chart that tracks the KSE100 generated by www.marketwatch.com:

KSE100 Over One Year Time

As you can see, the trend is actually on the increase. This is a good sign for the long term growth of the market and probably the economy as a whole. It does not mean things are perfect, but it also does not mean things are getting worse. Actually, a 100 point drop in a day is volatility that all advanced stock markets experience. Today the index is going up.

Let us look further at what The Nation’s own Business page reported on the same day:

Listing positive trends Pakistan registered in recent months, the Fund said the exchange rate has remained stable at Rs. 84–85 per U.S. dollar and the international reserves position has strengthened (the banking system’s gross foreign exchange reserves, including the State Bank and commercial banks, reached US$14.3 billion in mid-February, of this total the State Bank held US$10.5 billion).

The early signs of recovery in some sectors and the improved external position are encouraging, although there are risks and challenges to Pakistan’s economic program.

“Economic growth in Pakistan is starting to recover; large-scale manufacturing output has started to increase, the improvement in the global economy has helped manufacturing exports, and private sector credit growth has picked up somewhat as businesses rebuild their working capital.”

As we can see, there are positive fundamental economic indicators in the Pakistani economy. Certainly, foreign direct investment (FDI) is down over the past six months. But that is only one important indicator – not the only one. Why did The Nation ignore the positive reporting in its own newspaper? Was it politically inconvenient?

The Nation is correct that a key obstacle to attracting FDI is political uncertainty and fear of instability. But The Nation presents an interesting solution for these fears:

If the government wants to attract foreign investment, it must ensure more support for its policies by aligning them to popular wishes, rather than trying to please the USA through them. Also, it must work on the specific factors which keep away foreign investors.

This shows a lack of familiarity with attitudes among the worlds economies. Let us refer to an article in today’s Financial Times – a UK financial newspaper – about security and stability in the country.

The capture on Pakistani soil of Mullah Abdul Ghani Baradar is evidence that the message is getting through. It will bring encouragement to those in western capitals who already viewed military campaigns in Malakand and Waziristan to root out Taliban fighters as a turning point for a military with an ingrained hatred of India, the world’s largest democracy.

After decades of supporting militant activities in neighbouring India and Afghanistan this is a big step for Islamabad. After all, the Taliban was in some measure a creation of Pakistan as it sought to expand its influence into Afghanistan at the end of the cold war.

A much bigger step, however, is what happens next. First, the arrests need to move to trials and then convictions. Arrests of militants in Pakistan seldom, if ever, lead to convictions. Pakistan’s neighbours are sceptical that the security forces have the will to do much more than round up the usual suspects and then release them. They talk of “revolving door” arrests in which militants and masterminds somehow have a Houdini-like ability to escape a law ill-equipped to prosecute terror cases.

Second, Pakistan’s army and civil society need to sustain the effort against militants. It may be tempting to answer pressure from the international community with a few arrests and strikes and then ease off. Equally, a strengthening militant threat within Pakistan itself may sap the will to dismantle their networks.

Third,the leadership of militant movements in the region has a remarkable ability to regenerate. Baitullah Mehsud, a formidable leader of the Pakistan Taliban, was quickly replaced by a clansman Hakimullah Mehsud. Hakimullah, who was killed recently by a US drone strike, will no doubt be replaced by another.

Bringing these leaders under control goes to the heart of Pakistan, created six decades ago at the end of British rule of India, becoming a modern unified state. Some analysts talk about Pakistan’s internal dynamics as clan warfare. They say a Punjabi and Muhajir (Muslim exiles from India) elite is in a clash with Pashtun and Baluch in a state still partially formed decades after the British hurriedly quit India in 1947.

The short-term goal is ending the war in Afghanistan. The longer-term ambition is to bring lasting stability to Pakistan and the region.

It is not for this blog to take any position on the wisdom of national security policies. But I will say that if The Nation thinks that abandoning the fight against militants at home and refusing to cooperate with NATO in Afghanistan is the stability that will attract foreign investment, they must be reading some international economic news that I have not seen.

One thing is for certain, though: Editorial writers at The Nation are not reading their own newspaper. If they were, they would not report one thing in the Business page, and then contradict it in their editorials.

The editorial explains this bizarre conspiracy when The Nation talks about “the real trap.”

However, the real trap the government needs to escape, is that of the IMF, which is only offering aid because Pakistan is helping the USA, which is allied to Europe, which names the IMF Managing Director, in its War on Terror. The IMF conditionalities, combined with government extravagance, are causing the unchecked growth in debt by a government which never tires of its concern for the poor. While Pakistan might need assistance to tide over the difficulties it may be facing, such assistance should not be at the cost either of the national economy, or of national honour and dignity. As the increase in the debt burden under the PPP-led government shows, turning to the IMF has meant not just the sacrifice of national honour, but a worsening of the national economic situation.

Let me see if I can sort out this tangled mess of conspiracies.

First, the IMF is only offering aid to Pakistan because the USA wants it to, and the USA only wants it to because the USA is allied to Europe and Europe names the IMF Managing Director. Apparently there are some conditionalities involved with the IMF aid (as there are with all IMF aid), though The Nation doesn’t let us know what exactly they are. The Nation also tells us that there is some government extravagance (again, undefined). These mysterious conditionalities mix with the extravagence and cause massive increases in debt because according to The Nation PPP cares too much for the poor! All of this together, of course, hurts the national honour and dignity.

If you found that hard to follow, take no worries, dear reader. I have created a chart that explains it perfectly clearly.

Did that help explain? Don’t worry, I don’t understand either.

The national economy is not only a topic of debate but an issue that affects the lives of everyone. Because it is an issue of such seriousness, it deserves to have serious discussion. Making up some fantastic conspiracy theory by throwing in every bogeyman that you can think of (IMF, USA, Europe, War on Terror, “conditionalities,” poor people) and then saying that these are all mixing together to harm the national honor is a waste of time that could be better spent discussion real solutions to such important issues.