Is Pakistan Facing the Deepening Economic Crisis with Sub-3 Percent Growth for the Fifth Consecutive Year?
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Synopsis
Pakistan's economy is in peril as it endures a fifth consecutive year of sub-3 percent growth. Experts warn that without essential reforms, the country risks locking itself into a cycle of stagnation, increasing unemployment, and poverty. The World Bank's forecast of just 2.6 percent growth for FY25-26 adds urgency to the need for change.
Key Takeaways
- Pakistan's GDP growth is projected at 2.6 percent for FY25-26.
- The country has faced five years of sub-3 percent growth.
- Unemployment and poverty levels continue to rise.
- Catastrophic floods have adversely affected agricultural production.
- Economists emphasize the need for significant reforms to avoid stagnation.
New Delhi, Oct 9 (NationPress) The World Bank has projected a modest 2.6 percent GDP growth for Pakistan in 2025-26, indicating a troubling trend of economic stagnation that has persisted for five years, with escalating unemployment and deepening poverty.
Economist Asad Ali Shah has warned that Pakistan could find itself mired in a prolonged economic slump, as the World Bank’s recent update revises growth estimates down to only 2.6 percent for FY25-26. This follows a disheartening four-year period of low performance, as reported by Pakistan’s financial newspaper Business Recorder (brecorder.com).
Asad, who previously served as the president of the Institute of Chartered Accountants Pakistan (ICAP), expressed his concerns on the social media platform X, stating: "The World Bank’s latest Pakistan Development Update has lowered the FY25-26 growth forecast to just 2.6 percent, contrasting with the government's more optimistic estimate of around 4 percent."
This decline follows three consecutive years of poor economic performance — (-)0.2 percent in FY23, 2.5 percent in FY24, and 2.7 percent in FY25 — marking what many consider the worst four-year span in Pakistan’s economic history, characterized by ongoing low growth, record inflation, elevated interest rates, and a significant drop in investment confidence.
The economy has also been further impacted by devastating floods, affecting agricultural production, while inflationary pressures have re-emerged, according to the article.
The report also highlighted that Pakistan’s inflation rate fell to single digits in FY 2024/25, attributed to a decrease in food and energy prices. However, ongoing catastrophic floods are forecasted to disrupt food supply chains, pushing inflation rates higher through 2027.
Former Federal Finance Minister Miftah Ismail echoed these sentiments, stating that "the years from FY22-23 to FY25-26 represent the worst four-year period in Pakistan’s history regarding growth."
Miftah criticized the government for neglecting essential reforms such as privatization, downsizing ministries, and enhancing local governance, alleging that authorities are instead "purchasing stability through low growth" by maintaining high interest rates, taxes, and utility tariffs.
The outcome of this stance has been an increase in unemployment, poverty, and political discontent.
Asad emphasized that while Pakistan’s economy might have stabilized, it has not truly recovered. He noted that industrial output remains weak, agriculture is in severe crisis due to climate-related shocks and policy distortions, and job creation has stagnated.
"Stability does not equate to success," he cautioned, warning that without credible reforms to restore investor confidence, enhance governance, and redirect resources towards productivity and exports, Pakistan risks entrenching stagnation as its new normal.
Point of View
It's crucial to acknowledge the multifaceted challenges confronting Pakistan's economy. The persistent low growth rates and rising inflation pose significant threats to the nation's stability. It is imperative for the government to enact reforms that address these economic issues while fostering a conducive environment for investment and growth. Our nation deserves a pathway towards a more prosperous future.
NationPress
09/10/2025
Frequently Asked Questions
What is the GDP growth forecast for Pakistan in 2025-26?
The World Bank has forecasted a GDP growth of only 2.6 percent for Pakistan in 2025-26.
How long has Pakistan experienced sub-3 percent growth?
Pakistan has been experiencing sub-3 percent economic growth for five consecutive years.
What are the main economic challenges facing Pakistan?
Pakistan faces challenges such as rising unemployment, increasing poverty, and the impacts of catastrophic floods on agriculture.
What do economists say about Pakistan's economic future?
Economists warn that without significant reforms, Pakistan risks entering a prolonged phase of economic stagnation.
What role do floods play in Pakistan's economy?
Catastrophic floods have severely impacted agricultural output and contributed to inflationary pressures.
