Pakistan’s emphasis on “economic stabilisation” without significant structural reforms could lead to a cycle of stagnation and repeated crises, as per a report. Prime Minister Shehbaz Sharif acknowledged the negative impact of the US-Iran conflict on Pakistan and regional economies, citing rising energy prices and trade disruptions. Despite the government’s highlighting of “stabilisation” as a major economic achievement, critics argue it has become more about crisis management than sustainable growth planning.
Under the guise of stabilisation, Pakistan’s economy has seen a decline in industrial activity, purchasing power, and business conditions, with job creation slowing and poverty increasing over the past three years. Concerns over diminishing investor confidence, both foreign and domestic, persist due to policy uncertainty and weak demand, leading to capital flight abroad for safer investments.
For genuine economic stabilisation, the report stresses the need for profound structural reforms focusing on productivity enhancement, tax base expansion, institutional strengthening, industrial modernization, and boosting export competitiveness. Successful economies have utilized adjustment periods to reform structures for growth, unlike Pakistan, which has relied on austerity measures and import restrictions without tackling underlying weaknesses.
The recurring balance-of-payments crises in Pakistan are attributed to unresolved structural issues like low exports, poor productivity, high taxation, and reliance on external financing. Economic performance, the report argues, should be measured by factors like job creation, investment attraction, income growth, and enhanced productive capacity, rather than just foreign reserves or fiscal tightening.
