ASK almost anyone in Pakistan how the economy is doing and you won’t get a statistic. You’ll hear about a utility bill that doubled, a petrol price that keeps climbing, a cousin who left for the Gulf, a degree that never turned into a job. The data tells the same story in a colder voice.
Start with poverty. In October, the World Bank reported that about 48 percent of people living below $3 a day across the Middle East, North Africa, Afghanistan and Pakistan region are in Pakistan. Pakistan’s poverty rate at that line rose by 6.4 percentage points between 2018-19 and 2024-25 and now sits above 20 percent. Islamabad has pushed back, arguing that moving Pakistan out of the South Asia grouping distorts regional comparisons. As a point about regional totals, that is fair. But the Bank says the rise reflects the pandemic, the 2022 floods, high inflation, currency depreciation and years of painful adjustment, not the new label. A statistical reshuffle doesn’t empty a grocery basket.
Prices are the next pressure point. For a while, relief seemed real: average inflation for FY2025-26 came in at 6.7 percent. Then the Middle East conflict sent energy costs up again. Inflation reached 11.7 percent in May 2026, its highest since June 2024. Petrol prices in Pakistan rose by 40 percent or more and diesel has also climbed more than 40 percent. Diesel moves the whole economy, from tractors and trucks to the price of vegetables, so households feel it everywhere
The central bank has responded cautiously. It cut rates from a 22 percent peak in December 2023 down to 10.5 percent by December 2025, then raised them again to 11.5 percent in April 2026, where they have stayed. Among major economies, only Türkiye, Brazil and Russia have higher policy rates. Officials call this prudence and there is a case for it. But for a small shopkeeper or a young entrepreneur trying to borrow, it means credit stays expensive and expansion stays on hold
Then there is trade. In FY2025-26, goods exports fell 5.93 percent to $30.14 billion while imports rose 8.14 percent to $69.76 billion, widening the trade deficit to $39.6 billion. Textiles, the backbone of the export economy, were essentially flat at about $17.9 billion. In plain terms, Pakistan is selling roughly the same things to the world while buying more from it. That gap must be financed and the usual ways of financing it is remittances, loans and goodwill.
The picture isn’t uniformly bleak and it would be dishonest to say so. Tech exports hit a record $4.2 billion in the first eleven months of the fiscal year, up 20 percent. Strong services growth is expected to keep combined goods and services exports near $40 billion. These are real jobs and real skills, built largely by young Pakistanis with little help from the state. The trouble is that a thriving IT sector can’t yet carry a country of this size on its own.
The human development numbers explain why. UNICEF has estimated that around 25 million children aged 5 to 16 are out of school, among the largest such populations anywhere. The UNDP’s latest Human Development Report ranked Pakistan 164th of 193 countries, in the “low human development” group. Security remains a burden too, with the Global Terrorism Index placing Pakistan second in the world for terrorism’s impact. A child who isn’t in a classroom today is a worker without options tomorrow. A province that doesn’t feel safe won’t attract investors.
None of this is new and that may be the most frustrating part. Economists, ministers and international lenders have described the same structural problems for years: narrow exports, a thin tax base, underinvestment in schools and health and growth that never lasts long enough to lift ordinary incomes. The World Bank projects growth of 3.8 percent and inflation of 8.2 percent for the current fiscal year. That is stability of a sort, but it is not the kind of growth that pulls a family out of poverty.
The real question isn’t whether Pakistan faces a crisis. The numbers settle that. It is whether leaders will treat education, exports and job creation as urgent priorities rather than slogans and whether they’ll do it fast enough to matter. Pakistanis have shown resilience for decades. Resilience is a poor substitute for policy and it shouldn’t have to be.
—The writer is Ex-Chairman, National Disaster Management Authority.
