Pakistan growth highlights deep structural weakness in economy
New Delhi, May 16
Pakistan's latest GDP data points to a fragile and uneven recovery, with the economy growing 3.7 per cent in the current fiscal year, below the government's 4 per cent target and marginally under the nation's State Bank projection range, a report has said.
The report published in Dawn highlighted that the growth underscores the country's continued struggle to break out of a prolonged low-growth trap shaped by structural weaknesses, external financing pressures and repeated inflationary shocks.
The economy has expanded to over $452 billion, with per capita income rising slightly to $1,901, it said.
The uptick offers limited real relief to households facing high living costs, stagnant wages and weak purchasing power.
It further noted that sectoral performance remains uneven.
Large-scale manufacturing has rebounded after a period of contraction, while services continue to dominate overall growth, driven largely by consumption and state expenditure rather than productivity gains.
In contrast, the agriculture sector experienced weak performance, despite employing a large share of the workforce.
The industrial recovery is also being viewed as cyclical, emerging from a low base rather than reflecting sustained expansion.
For instance, sharp increases in automobile production follow earlier declines caused by import restrictions and supply chain disruptions, the report said.
The report flagged that the neighbouring country continues to lag in export-led industrial growth, with investment, tax mobilisation and productivity indicators remaining weak.
Despite stabilisation efforts and IMF-backed reforms helping avert immediate crisis risks, long-term growth prospects remain uncertain, according to the report.
In addition, the State Bank of Pakistan has projected tepid growth ahead, contingent on energy prices and geopolitical developments, including ongoing regional tensions.
— IANS
Reader Comments
Living just across the border, I've seen firsthand how political instability and external debt have crippled their economy. The IMF bailouts keep them afloat but don't fix the root problems. What's worrying is how this affects South Asian regional stability.
The report's point about agriculture is telling - 40% of their workforce is in farming yet growth there is weak. Meanwhile, they're spending heavily on defence instead of investing in irrigation, storage infrastructure or farmer support systems. Neighbour or not, it's sad to see a country with such potential waste it. 🇮🇳
While we shouldn't gloat, this does highlight how India's economic fundamentals have stayed stronger despite our own issues. But let's be honest - we also have structural weaknesses, especially in job creation and manufacturing. We need to learn from each other's mistakes rather than just pointing fingers.
Cyclical recovery from a low base - that's the key phrase here. Auto production bouncing back because they lifted import restrictions doesn't mean sustainable growth. India went through similar pains in the 90s. Pakistan needs consistent policies, not short-term fixes. But with their political turmoil, who knows when that'll happen?
As someone who follows South Asian economics, this is textbook low-growth trap. They can't attract FDI because of instability, can't fix instability without economic growth, and the IMF keeps the cycle going. Per capita income at $1,901 is devastating - that's lower than Bangladesh now. Hope they find a way out. 🙏