New Delhi, May 17 Pakistan’s prolonged focus on “economic stabilisation” without meaningful structural reforms risks trapping the country in a cycle of stagnation and recurring crises, a report has said.
The report came after Prime Minister Shehbaz Sharif acknowledged that the ongoing US-Iran conflict had negatively impacted Pakistan and other economies in the region through rising energy prices, geopolitical uncertainty and disruptions in trade and supply chains, according to an editorial published by dawn.com.
While the government has repeatedly highlighted “stabilisation” as a key economic achievement, the editorial argued that the term has increasingly become a substitute for crisis management rather than a roadmap for sustainable growth.
It noted that stabilisation policies in Pakistan have largely focused on avoiding balance-of-payments defaults, controlling imports, managing exchange rates and tightening fiscal discipline. However, these measures, according to the editorial, have failed to strengthen the economy’s long-term foundations.
The article pointed out that under the banner of stabilisation, Pakistan’s economy has witnessed slowing industrial activity, declining purchasing power and worsening business conditions. Job creation has weakened, poverty has risen and many businesses have either downsized or shut operations altogether over the past three years.
The editorial also highlighted concerns over declining investor confidence, saying both foreign and domestic investors remain wary because of policy uncertainty, weak demand and shrinking profitability. It warned that domestic capital was increasingly moving abroad in search of safer and more stable opportunities.
According to the piece, true economic stabilisation can only succeed if accompanied by deep structural reforms aimed at improving productivity, broadening the tax base, strengthening institutions, modernising industry and enhancing export competitiveness.
The editorial argued that countries which successfully stabilised their economies used adjustment periods to reform economic structures and prepare for growth, whereas Pakistan has repeatedly relied on austerity measures and import restrictions without addressing underlying weaknesses.
It further stated that the country’s recurring balance-of-payments crises stem from unresolved structural issues such as low exports, poor productivity, excessive taxation and dependence on external financing.
The editorial concluded that economic performance should not be judged solely on the basis of foreign exchange reserves or fiscal tightening. Instead, it said, the real benchmark should be whether policies generate employment, attract investment, raise incomes and improve the country’s productive capacity over the long term.
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