THE recent conflict has between India and Pakistan has left the country in a reflective state.
While the military objectives may have been met, the cost in economic terms is only beginning to unfold.
What lies ahead is not merely a recovery effort but a national reset—one that demands firm focus on economic rebuilding.
In 2024, Pakistan’s economy exhibited signs of stabilisation, albeit slowly.
Official figures put GDP growth at 1.9% — an improvement from the contraction in 2023, but still modest and far below what is required for meaningful progress.
Agriculture and services sectors offered some support, while industrial production remained sluggish, hindered by power shortages, inflation and rising input costs.
Inflation, though down from its peak, averaged 23.6% across the year, continuing to erode real incomes.
Food and fuel remained stubbornly expensive for ordinary households.
Poverty deepened further, with estimates suggesting over 40% of the population now living below the poverty line.
Millions slipped into economic hardship, especially in rural areas where public support was thin.
Unemployment stayed around 8%, with youth and educated jobseekers finding limited opportunities.
The debt situation also grew more pressing.
By the close of 2024, total public debt had climbed to PKR 67 trillion—roughly 75% of GDP.
Debt servicing alone consumed over 60% of government revenues, leaving little room for development or social spending.
Externally, the country faced considerable pressure.
Over 20 billion US dollars were repaid in foreign debt obligations, straining reserves that hovered just above 8 billion dollars for much of the year.
While inflows from the IMF and friendly nations provided temporary relief, the broader picture remained one of vulnerability.
The fiscal deficit widened to 7.4% of GDP, as the government struggled with underperforming revenues and high expenditure.
Despite repeated attempts, meaningful tax reform proved elusive.
Revenue targets were missed and the reliance on indirect taxation continued to burden the lower-income population.
Trade remained weak, affected by regional uncertainty and import controls that disrupted industrial supply chains.
Some improvements were noted.
The central bank maintained a tight policy stance that helped to contain inflation by the year’s end.
Overseas remittances reached over 29 billion dollars, offering vital support to the current account.
The technology and services sectors, though still small in size, showed encouraging signs of growth.
But these isolated positives are not enough.
The need for comprehensive reform is now more urgent than ever.
Pakistan must shift its economic direction with serious structural changes—starting with broadening the tax base, reducing losses in state-owned enterprises and targeting subsidies more efficiently.
Agriculture, which supports a large share of the population, needs investment in water management, mechanisation and crop diversification.
The energy sector remains another major concern where inefficiencies and financial losses continue to hinder industrial recovery and investor confidence.
Human capital cannot be sidelined.
Without strong investment in education, health and skill development, economic growth will remain shallow and exclusive.
Prioritising vocational training, especially for young people and women, could prove a game changer over time.
This moment demands a long-term view.
Pakistan cannot afford to return to business as usual—relying on short-term loans, bailout packages and cosmetic policy changes.
What is required is a national economic agenda built on fiscal discipline, political stability and the confidence that comes with genuine reform.
War may have tested our strength, but rebuilding the economy will define our future.
Only by focusing on growth, fairness and self-reliance can Pakistan chart a more secure and dignified path forward.
—The writer is former Regional Executive Inclusive Development at NBP, Mirpur AK. ([email protected])
