Pakistan's manufacturing meltdown as investment collapse exposes deep economic mismanagement

Lahore [Pakistan], November 9 : Pakistan's manufacturing sector, once hailed as the driving force behind economic growth and job creation, is now enduring one of its gravest crises in recent years. The sector has suffered a staggering 46 per cent decline in private investment over the last six years, sparking serious concern among economists and industrial experts who warn of long-term economic stagnation, as reported by The Express Tribune.

According to The Express Tribune, private investment in manufacturing plunged from PKR 706 billion in fiscal year 2018-19 to just PKR 377 billion in 2024-25, the weakest level of industrial expansion in over a decade. Ali Imran Asif, Senior Executive Committee Member of the Lahore Chamber of Commerce and Industry (LCCI), warned that the current investment rate was insufficient to even replace depreciating machinery, signalling an alarming erosion of Pakistan's industrial foundation.

"We are not dealing with a short-term dip; we are watching our industrial base disintegrate," Asif stated that without structural reforms in productivity, innovation, and competitiveness, the country risks long-term industrial paralysis.

Over the past six years, the combined contribution of the manufacturing and mining sectors to Pakistan's GDP has remained stagnant at around 13.2 per cent. Erratic government policies, high energy costs, and volatile currency fluctuations have also crippled export-orientated industries such as textiles, leather, and engineering goods. Large-scale manufacturing output fell by 1.5 per cent in FY25, reversing the meagre 0.92 per cent growth seen in FY24.

Meanwhile, regional economies such as India and Bangladesh posted much stronger industrial growth, driven by consistent policies and export diversification, as highlighted by The Express Tribune.

Economists argue that Pakistan's industrial slowdown is not solely the result of high interest rates but also of chronic policy inconsistency and poor investor confidence. Economic analyst Shahid Saleem stated that import curbs and weak domestic demand have hindered production, forcing factories to operate below capacity.

Experts warn that unless Pakistan urgently crafts a credible industrial revival strategy and ensures policy stability, Pakistan's manufacturing decline will deepen, undermining exports, employment, and overall economic resilience, as reported by The Express Tribune.

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