New Delhi, March 18: Despite the government’s claims of stability and reforms, the reality on the ground raises questions about Pakistan’s economy. Experts indicate that deeply rooted structural weaknesses, particularly the ongoing decline in production capacity, continue to impact the country’s economic situation.
According to a report by The Express Tribune, while the government touts its achievement of avoiding default, analysts argue that the broader economy remains fragile, with no clear signs of sustainable reform. Key economic indicators point towards persistent pressures, including slow economic growth, high inflation, rising unemployment, and increasing debt.
Experts highlight that the most significant issue is the weak production capacity, which limits 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 further pressured 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.
Currency devaluation has intensified these issues, leading to increased inflation and reduced purchasing power, resulting in heightened economic difficulties. Experts warn that the economic crisis is now affecting the social fabric as well, with rising poverty, food insecurity, and inequality increasing societal divisions and 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 solid results, raising questions about their effectiveness. Analysts argue that the continued reliance on short-term measures like subsidies, welfare spending, and asset sales has weakened the economic framework rather than 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.