The current increase in the international oil prices, might hurt the country's economy by its long or short terms' impact and also by not helping the government in bringing down the inflation rate in the coming days, analysts said.
Since the start of new fiscal year, the inflation rate has been expanding its ground as a result of sharp rise in essential commodities, mostly after the wheat crisis in the country.
The most important work right now for the government is to consider that how it can control the inflation rate to match its promises.
The government says to revive economic activity in the country it has reduced the interest rate on banks' loans. No doubt, following the economic strategies, the business activities have picked up modestly.
But on the other hand some negative factors are still persisting and needed to be resolved. Due to persistent unemployment and downsizing in different departments, poverty is also on the rise.
Analysts observed that besides these factors, the rising trend in the oil prices is also causing concern for the world economy.
Lingering worries over the present upward trend in the oil prices are creating a lot of uncertainties on both the political and economic fronts the world over.
Locally, higher oil prices had made payment rates high and this factor had increased the dollars' demand by the corporate factor for clearing the import bills, which would definitely increase the trade deficit.
The flare-up in the international oil prices is attributed to the rising concern over a large drop in the export of oil from Iraq and ongoing financial crisis at Russian oil giant, Yukos.
According to a report, there is no unusual demand for oil, actually it was only driven by rising speculations about the shortage of oil and possible attacks on the US.
After crossing $47 a barrel mark in the world markets, the oil prices might touch the resistance level of $50 per barrel.
In the meantime, all eyes will be on what's going to happen to the stock figure, despite the fact that the Saudi Arabia wants to see the crude prices between 25-30 dollars a barrel.
Locally, it is deeply felt that the fundamentals were showing some positive trends as the country is still on the way to recovery.
The most part of the world welcomed 2004 with weak economy due to recession like situation but somehow tackling the uneasiness in the way.
The world's major economy, US could not come out of its own grievances. Budget deficit and trade deficits were playing negative roles in upswing of its own economy as well as the world's.
Th US invasion of Iraq has pushed the world into deep unforeseen uncertainties. Heavy fighting has claimed several lives and huge damages of oil in Iraq, and the situation is deteriorating day by day.
The aftermath of all these factors has started casting shadows over the Pak economy. In a way that oil payments became high and expectedly the imports of food to widen trade deficit for the current year.
Following the factors, Pakistan is already suffering a lot owing to higher payments. Apparently, it seems that the government is doing a lot to deal with the situation but more practical and realistic measures are needed to share the nation's burden.
The fact is that inflation rate has gone up eight-year high due to sharp rise in the commodity prices. And also, pre-payments of debt, clearance of import bills, imbalance balance of payments have pushed the dollar demand up.
But the leading factor behind the dollars' rise was matching it with the regional countries currency units, as it was necessary to keep the rupee to deal export competition in the world markets.
The regional states had allowed their currencies to lose grounds to keep their exports competitive in the world markets. Pakistan has to follow suit.
Treasury head of the State Bank of Pakistan (SBP), Zafar Shaikh defending the rupee's gradual fall policy said that souring the other regional currencies' slide, the local currency's fall was nominal.
Common man of any country did not get the benefits from country's growth. It seems that the phrase is true that the poor of the rich countries pay for the rich of the poor countries.
Sometimes ago, the State Bank of Pakistan (SBP) said that inflation would come down. The bank also said that rupee had gained a lot of strength, so rupee's fall was expected versus the dollar.
The question here is that how the investment will improve, how youth would get jobs and how the poverty rate would come down in the country.
Generally it is recognised that high growth may not be sufficient to arrest rising inflation and control the unemployment.
Policy makers of the country were of the view that 6-8 percent growth rates are likely to bring positive change in the coming days.
But at the same time, a few were still in a shock because swelling trade deficit is wiping out all the achievements.
The country's trade imbalance during 2003-04 swelled by more than three times to $3.20 billion, as against a little more than one billion dollars in the proceeding year.
Some of them insist that nearly double increase in growth rate would be required to deal the poverty alleviation plan, not 6-8 percent.
After 9/11, the remittances went up and crossed the mark of 12 billion dollars, but due to high payment bills, the reserves are not showing further increase in the present trend.
According to the SBP, the bank would tighten its monetary policy for the next six months more, to control inflationary pressure and maintain exchange rate.
The country's consumer price inflation hit a six-year high of 8.45 percent in June as compared to the same month last year.
Annual inflation over the fiscal year was 4.57 percent against the targeted 4.2 percent and 3.10 percent the previous year. The bank hinted further increase in inflation.
The government aims to keep inflation at or below 5.0 percent in 2004/05, but some currency analysts were of the view that the rise in domestic prices would be much higher.
The central bank said that it would strive to ensure that current growth and investment momentum remained on track. The central bank plans to keep exports competitive and check inflation.
Pakistan is eyeing growth of 6.6 percent in fiscal 2004/05 against 6.4 percent in the last fiscal year.
However, it is said that the trade balance would get worse in 2004/05 on strong import demand.
During the last three months, Pakistan's trade deficit has been more than $500 million each month. In 2003/04, $3.2 billion trade deficit was recorded - almost triple the deficit in the preceding year. Domestic private credit demand, which peaked in 2003/04 at 300 billion rupees, is expected to decline. The central bank has targeted 200 billion rupees in private credit this year.
The central bank has expressed concern over high unemployment rates, saying that a more aggressive monetary policy would only aggravate the problem.