Strengthening the middle-class economy

US President Donald Trump wants to be known globally as a peacemaker, and his number one priority is his own people. He is responding to the expectations of US citizens who elected him for a second time as the American president.

Referring to the Los Angeles burning, people in the US are pinning hopes on Mr Trump to redirect funds spent on ‘international priorities’ to address the urgent needs of Americans, says Pakistani-American citizen Dawar Naqvi.

Referring to funds to prevent and tackle such tragedies as the Los Angeles fires, he says, “It is time for the US to invest in rebuilding lives, communities, and hope in the nation as a whole.”

Mr Trump has directed every US federal department and agency to address the cost of living issue, namely, to look at lowering the costs of housing, healthcare, and key household items, groceries, and fuel.

Not only that, the US President has signed a directive creating the Department of Government Efficiency (Doge), a new advisory body on cutting government costs.

Though in some respects, his inaugural speech was almost statesmanlike, say analysts at Dawn, many will continue watching Mr Trump to see whether he has really changed.

Transformational change depends less on physical capital and more on the intellectual input of bourgeoisie professionals and skilled manpower

In this digital era, the transformational change will depend less on physical capital and more on intellectual input provided by middle-income group professionals and skilled manpower. Home remittances now not only exceed Pakistan’s total exports of primarily low value-added goods but financially empower households to improve the quality of life of their members.

While recognising the level of macroeconomic stability achieved so far, analysts point out that imports have started growing even though large-scale manufacturing output is not picking up. And to quote Dawn’s analysts, “We are no longer in a position to pull off higher growth rates by encouraging imported consumption with borrowed money.”

An assertive middle-income group challenging the status quo — as is widely surfacing in national discourse and political landscape — indicates the strategic need for strengthening this sector of the economy.

To quote Dr Umair Javed’s article titled ‘The middle class in crisis’, the white-collar salaried class forms the core of the recent anti-status quo upsurge, and political consequences of frustration among the middle class are visible on social media.

On Jan 8, Senator Aon Abbas moved a bill in the Senate amending various articles of the Constitution for the creation of the South Punjab province. He argued that 40 per cent of the population living in the southern part of the province lacked basic facilities like health and education. Of the total 50,112 schools in Punjab only 13,446 are located in the southern parts of the province. Likewise, he added, of the total 2,461 basic health units in Punjab, 754 units were located in the divisions of South Punjab.

An assertive middle-income group challenging the status quo indicates the strategic need for strengthening this socio-economic group

“The government recognises the pressing needs of its citizens, particularly in regions with poor social indicators. However, it’s crucial to strike a balance between development spending and fiscal sustainability,” says Khurram Schehzad, advisor to the finance minister.

Mr Schehzad further explained, “Social sector spending, particularly in critical areas such as education and healthcare, now falls under provincial jurisdiction following devolution. This shift has created both opportunities and challenges for governance reforms and strengthening sub-national state capacity.”

However, the problems in federal development spending are multiple and deep-seated. Take the following examples. A World Bank mission would visit Pakistan early next month to assess slow progress on the 4,320MW Dasu Hydropower Project as agreement on additional financing worth $1 billion is pending due to the failure to secure approval of PC-1 by the Water and Power Development Authority.

Furthermore, eight years after the Gwadar deep seaport was initiated — built as part of the multi-billion-dollar China-Pakistan Economic Corridor — transport and energy infrastructure remain a non-starter and, in the words of the planning minister, is more of a “white elephant instead of becoming a regional transhipment hub.”

Coming back to emerging social forces, a concerted effort is needed by a team that understands (weakening) tribal customs and is cognisant of the societal changes and power dynamics at play, says Ghazan Jamal, a development practitioner. He adds that a closer look at the jirga process and local dynamics can explain the cracks in the peace agreement.

Similarly, the movements for the rights of Gwadar led by Jamaat-i-Islami for resolving local problems and human rights by the Balochistan Yakjahati Committee represent the strengthening of non-traditional social forces.

And religious and political parties, both from opposition and government parties and society members in Gilgit-Baltistan have launched a movement for constitutional status for the region, calling on the federal government to settle the matter without further delay.

A joint statement after the event, organised by Fikar, a GB-based non-governmental organisation, at the Islamabad National Press Club, said that all political and religious parties were in consensus that the biggest issue of GB people was its constitutional status and identity.

The declaration demanded the implementation of proposals made by former federal ministers, the late Sartaj Aziz and Farogh Naseem, regarding the provisional constitutional province status of GB.

Published in Dawn, The Business and Finance Weekly, January 27th, 2025