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Tax hikes
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Energy price increases
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Slower GDP growth
Those hit later.
The Long-Term Drag: Austerity Is Not Market-Friendly
Multiple empirical studies show mixed outcomes:
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1997–2017 GARCH study: IMF lending announcements had a statistically significant negative effect on PSX returns over time due to growth suppression.
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2015–2022 regression studies: Short-term positive correlation, inconsistent longer-term results.
Why?
Because IMF conditions typically include:
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Fiscal tightening
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Subsidy removal
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Higher energy tariffs
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Tax expansion
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Slower domestic demand
This compresses margins and volumes after the relief phase.
Why 2023–2025 IMF Cycles Look “Different”
This time, markets reacted more strongly. Why?
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