New Delhi, Feb 6 (NationPress) In the past ten years, Pakistan-occupied Kashmir (PoK) has faced ongoing economic stagnation, with a significant factor in this decline being the region's increasing fiscal fragility, as highlighted in a recent report.

The report from the European Times indicates that the worsening economic conditions in PoK are characterized by sluggish growth, soaring unemployment, growing poverty, and decreased development expenditure.

Public development spending was around 32 to 35 percent of regional budgets in 2020. However, by 2024-25, this figure is projected to drop to 22 to 25 percent, as rising subsidy costs, debt payments, and administrative expenses limit capital investment.

High inflation has diminished incomes, while a lack of industrial growth, falling infrastructure investments, and credit limitations stifle private-sector advancement. The region's increased reliance on remittances and federal aid highlights its precarious economic position.

Additionally, issues such as governance deficits, climate challenges, and inadequate human capital have perpetuated a cycle of economic vulnerability, hindering sustainable and inclusive development, as the report emphasizes.

“From 2020 to 2024-25, key metrics indicate a drop in productivity, a rise in unemployment, weakened public investment, and heightened reliance on external assistance. These trends have transformed the region’s economic, infrastructural, and social landscape,” the report noted.

While average income was approximately $1,400 to $1,500 in 2020, it has slightly fallen to about $1,300 to $1,400 by 2024-25 due to rampant inflation and currency depreciation.

“This decline in purchasing power has curtailed household spending and weakened local demand, further stifling economic activity,” the report revealed.

Furthermore, the lack of industrial clusters, poor logistics, and inadequate access to finance have hindered industrial growth.

“The region has struggled to create high-productivity jobs, reinforcing its reliance on agriculture, government employment, and remittances,” the report added.

In 2020, the unemployment rate was estimated at around 6 to 7 percent. By 2024-25, it is expected to rise to nearly 9-11 percent, with young and educated workers being the most affected.

Moreover, agricultural productivity has dropped to around 92–95 by 2024/25. Factors such as climate variability, floods, landslides, soil erosion, and limited irrigation facilities have adversely impacted crop yields. Road connectivity remains inconsistent, especially in remote mountainous areas.

Small and medium enterprises are grappling with challenges in accessing formal financing, leading them to depend on high-interest informal lenders, the report states.