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Pakistan's Economic Stagnation: Low Growth, High Unemployment Persist

Pakistan's economic growth remained modest at around 3% for FY 2024-25, barely keeping pace with population growth, while national unemployment stayed high at 8%. Youth unemployment is a critical concern, rising to 11.5% for those aged 15-29. Record remittance inflows of $38.3 billion now act as "distress insurance" for households, coinciding with declining food consumption and domestic earning capacity. The report criticizes the country's focus on policy inputs over outcomes, citing dysfunctional implementation of development plans and stagnant exports.

Key Points: Pakistan's Low Growth, High Unemployment Crisis

  • Modest 3% growth matches population rise
  • Youth unemployment hits 11.5%
  • Record remittances mask domestic distress
  • Five-Year Plan implementation called dysfunctional
2 min read

Pakistan stuck with low economic growth, rising unemployment: Report

Report reveals Pakistan's economy stuck at 3% growth, 8% unemployment, with rising youth joblessness and declining household consumption.

"Remittances increasingly function as distress insurance rather than development capital. - East Asia Forum article"

New Delhi, Feb 9

Pakistan's growth in 2025 remained modest, unemployment stayed high and youth unemployment rose, underscoring weak productivity and poor job creation, according to an article in East Asia Forum.

The country's economic growth was modest at around 3 per cent in fiscal year 2024-25, barely keeping pace with population growth, while unemployment remained high at 8 per cent. Sustained growth of 6-7 per cent is necessary to absorb new labour market entrants and reduce unemployment, the article further states.

The economy is unable to absorb over 3.5 million new entrants each year into productive jobs. Unemployment among youth aged 15-29 rose to 11.5 per cent, well above the national average of 8 per cent and higher among educated youth, the article points out.

Pakistan's Household Integrated Economic Survey 2024-25 also shows that real per capita consumption of major food items has declined, signalling household distress and the number of earners per household fell from 1.86 to 1.72 between 2018-19 and 2024-25.

Remittances were one of the paradoxes of 2025. With exports and foreign direct investment subdued, inflows reached a record $38.3 billion in fiscal year 2024-25 and became Pakistan's most reliable source of external financing. But rising reliance on remittances has coincided with declining domestic earning capacity and shrinking food consumption at the household level.

Remittances rose from 4.96 per cent of household income in 2018-19 to 7.77 per cent in 2024-25. They increasingly function as distress insurance rather than development capital, signalling weak domestic job creation, the article observes.

These facts point to a deeper structural problem in Pakistan's economic model. Policy has remained focused on inputs rather than outcomes. The 13th Five-Year Plan (2024-29) set ambitious goals for exports, productivity and inclusive growth, but implementation has been dysfunctional and shallow.

Exports stagnated at around $32 billion, private investment remained subdued and public investment continued to deliver weak returns, the article further stated.

Pakistan's deeper problem is not a shortage of reform ideas but weak execution, with delays and regulatory frictions sapping productivity growth. In 2026, Pakistan must treat time and performance as core policy variables, improve investment efficiency and translate stabilisation into productivity and jobs, the article added.

- IANS

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Reader Comments

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Priya S
The part about remittances being "distress insurance" is so telling. Families are surviving on money sent from abroad because there are no good jobs at home. This brain drain and reliance on external funds is not sustainable for any country's future. Very sad for the common people.
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Aman W
"Weak execution" - that's the key phrase here. You can have the best five-year plans on paper, but without good governance and implementation, it's all for nothing. The decline in food consumption per capita is the most alarming stat. Hope things turn around. 🙏
S
Sarah B
Reading this from an economic perspective, it's a classic case of structural issues. Stagnant exports and weak private investment are huge red flags. Growth at 3% with population growth similar means zero per capita growth. That's a recipe for long-term stagnation and public discontent.
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Karthik V
While the situation is difficult, I think the article misses some context. Every country faces economic cycles. India also had its challenges in the past. The focus should be on how to build regional trade and connectivity that can lift all economies. A stable Pakistan is ultimately good for South Asia.
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Nisha Z
The educated youth unemployment being even higher is heartbreaking. All those degrees and no opportunities. It's the government's fundamental duty to create an environment for job creation. When people can't afford basic food, it's a serious failure. My heart goes out to the families struggling.

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