Pakistan's economic stabilisation under scrutiny amid persistent structural pressures

Lahore [Pakistan], January 8 : Pakistan's business community has begun to voice renewed concerns over the country's economic direction, questioning whether the recent spell of macroeconomic stability can meaningfully evolve into long-term growth. Although the government highlights improvements in key indicators, industrial leaders argue that the fundamental weaknesses of the economy remain largely untouched, as reported by The Express Tribune.

According to The Express Tribune, Pakistan Industrial and Traders Association Front (PIAF) Chairman Syed Mehmood Ghaznavi said that despite an uptick in foreign inflows and healthier reserves, the government continues to be overburdened by massive interest-related obligations that consume much of the national budget.

He stressed that the perceived fiscal breathing space has emerged mainly due to strict conditions enforced under the International Monetary Fund (IMF) programme rather than through deep-rooted domestic reforms.

Ghaznavi noted that although Pakistan has witnessed a decline in inflation, dropping from above 35 per cent in mid-2023 to around 5.6 per cent by December 2025, and reserves increasing to more than USD 21 billion, real economic expansion remains subdued.

GDP growth for FY26 is projected at roughly 2.5 per cent, far below what is needed to accommodate the country's expanding labour force. He warned that this persistent disconnect between stabilisation and growth has become a recurring pattern.

The PIAF chairman said the real challenge lies in lingering structural flaws, including a narrow tax base, inefficient and loss-making state-owned entities, persistent power-sector circular debt of around PKR 1.8 trillion, wasteful subsidies, and stifling regulations that deter investment.

He emphasised that the country's industrial backbone remains under pressure due to high energy tariffs and chronic fiscal leakages.

Industrialist Waseem Malik raised similar concerns, saying that an economy of Pakistan's size cannot survive on austerity-driven stabilisation alone.

He argued that while interest rates have gradually eased, industrial borrowing remains frozen, and exporters continue to struggle with elevated energy and logistics costs, as highlighted by The Express Tribune.

Both leaders warned that unless policymakers pivot from short-term firefighting to medium-term growth planning, Pakistan risks falling back into another cycle of crisis.

Ghaznavi urged the government to initiate monthly multi-stakeholder meetings to evaluate policies, maintain reform momentum, and pursue a coherent growth strategy.

Without such coordination, he cautioned, Pakistan's stability may prove short-lived, as reported by The Express Tribune.

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