New Delhi, March 18: Despite the Pakistani government’s assertions of stability and reform in its economy, the reality on the ground raises significant doubts about these claims. Experts indicate that deeply entrenched structural weaknesses, particularly the ongoing decline in production capacity, continue to impact the country’s economic situation adversely.
According to a report by The Express Tribune, while the government touts its achievement in avoiding default, analysts argue that the broader economy remains fragile, with no clear signs of sustainable reform. Key economic indicators consistently point towards pressure, including slow economic growth, high inflation, rising unemployment, and increasing debt.
Experts highlight that the most pressing issue is the weak production capacity, which is limiting the country’s sustainable economic growth. Pakistan’s production system has been deteriorating for years due to policy neglect and poor governance. Industrial and agricultural production, considered the backbone of economic activities, has either stagnated or declined.
The report notes that a revision of data in 2021 showed the industrial sector’s contribution to GDP falling from 20.9% to 19.5%, reflecting structural decline. The large-scale manufacturing sector continues to struggle, while the agricultural sector faces rising costs, falling prices, and climate-related challenges. Weak policy support has placed additional pressure on farmers, leading to increased poverty in several regions.
The weak production base has also exacerbated external imbalances. Limited export capacity and growing dependence on imports have weakened foreign exchange reserves, forcing the country to borrow repeatedly. Public debt has surged over the past two decades, raising concerns about its sustainability.
The devaluation of the currency has intensified these issues, leading to increased inflation and reduced purchasing power, resulting in heightened economic hardships for the populace.
Experts warn that the economic crisis is now affecting the social fabric as well. Rising poverty, food insecurity, and inequality are increasing divisions within society and heightening the risk of instability.
The report also states that government-supported initiatives, such as the Special Investment Facilitation Council (SIFC), have so far failed to deliver tangible results, raising questions about their effectiveness.
Analysts argue that a continued reliance on short-term measures like subsidies, welfare spending, and asset sales has further weakened the economic framework instead of addressing core issues. They assert that without immediate and comprehensive reforms to rebuild production capacity, improve governance, and strengthen the business environment, Pakistan’s economic challenges could deepen further.