Pakistan’s economic growth in 2025 was modest at around 3%, barely keeping up with population growth. Unemployment remained high at 8%, emphasizing the need for sustained growth of 6–7% to create more jobs. The country struggles to provide productive employment for over 3.5 million new job seekers annually.
Youth unemployment in Pakistan, particularly among those aged 15–29, rose to 11.5%, surpassing the national average of 8%. The Household Integrated Economic Survey 2024–25 revealed a decline in real per capita consumption of essential food items, indicating household distress. Additionally, the number of earners per household decreased from 1.86 to 1.72 between 2018–19 and 2024–25.
Despite subdued exports and foreign direct investment, remittances to Pakistan reached a record $38.3 billion in fiscal year 2024–25. However, the increasing reliance on remittances reflects a decline in domestic earning capacity and food consumption at the household level. Remittances now serve more as a safety net rather than a source of development capital.
Pakistan’s economic model faces a structural challenge, with policy focus on inputs rather than outcomes. The 13th Five-Year Plan (2024–29) aimed for ambitious export, productivity, and inclusive growth targets, but implementation has been ineffective. Stagnant exports, low private investment, and weak returns on public investment have hindered progress.
The core issue in Pakistan lies in weak execution of reform ideas, leading to delays and regulatory obstacles that impede productivity growth. To address these challenges in 2026, Pakistan must prioritize time and performance as critical policy factors, enhance investment efficiency, and shift from stabilization efforts to fostering productivity and job creation.
