In Pakistan, despite the immense significance of the SME sector, it remains largely financially excluded, as reflected from the declining trend in SME finance over the years, constituting only 8% of the banks’ total advances as of June 2012, down from 16% in June 2007.
But you can also see that a substantial part of the cumulative decline in inflation expectations may be due to supply-side factors. Indeed, in the hypothetical absence of these supply-side shocks, ten-year inflation-linked swaps could currently be trading at levels much closer to 2%.