Pakistan’s stagnation and the triumph of inertia
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Pakistan’s economic trajectory is a study in the uninspiring inevitability of decline, a slow march toward a horizon that retreats with every step. The first half figures of FY25— large-scale manufacturing down 1.87 percent, power generation down 3 percent, and agricultural output barely registering a pulse— suggest that GDP growth may soon be revised downward to a dismal 1-2 percent. This is less a forecast than an exercise in numerical masochism. The International Monetary Fund (IMF), that purveyor of tepid optimism, dutifully projected 3 percent growth for FY25 in its January 2025 World Economic Outlook, only to face the near-certainty of trimming it yet again— just as it did in 2023 when forecasts withered from 2 percent to 0.5 percent. This is no cyclical malaise, no mere technocratic puzzle awaiting a clever fix. It is Pakistan’s new equilibrium — a “sustainable” growth rate if such anaemia can be dignified with the term.
The decline is not some solitary Pakistani farce. Half a world away, the United States is crafting its brand of economic vandalism with the blunt, gleeful swing of Trump’s trade policy. According to the US Department of Commerce, January’s goods deficit hit $156.8 billion as firms stockpiled in anticipation of looming tariffs— 25 percent on Canada and Mexico and 10 percent on China. Imports erode GDP, prompting Atlanta Fed’s GDPNow model to signal contraction. Michigan’s consumer sentiment index took a 10.5 percent nosedive in March to 57.9, its nadir since 2022. Retail sales, tipped to dive 1.2 percent in January and crawl back 0.2 percent in February, expose the wreckage. Trump’s tariff sledgehammer has splintered more than just trade agreements.
The reverberations will not stay neatly contained. A US downturn — especially one born of self-sabotage — convulses through the global economy’s delicate web. Pakistan, interminably teetering on a fiscal precipice, will feel the jolt. Foreign direct investment, a measly $1.9 billion in FY24 per the SBP, will likely dwindle further as risk-averse capital flees. Trade models indicate that textiles, accounting for over 53 percent of Pakistan’s $31 billion in FY24 export earnings, will falter if American demand contracts.
Ten years and 78 progress review meetings later — a figure that boasts diligence while conceding futility — Gwadar sits parched and powerless.
Javed Hassan
Yet Pakistan’s paralysis owes less to external shocks than to its own inertia. The reforms that could unlock productivity, attract investment, or restore fiscal sanity are precisely the ones that threaten entrenched interests and risk short-term upheaval — an unpalatable prospect in the corridors of power across the political spectrum. The pursuit of ephemeral growth remains a constant delusion. And so, the status quo endures, unchallenged and unchanging.
A decade ago, the China-Pakistan Economic Corridor (CPEC) arrived with trumpets and superlatives— a $62 billion “game-changer” billed as Pakistan’s express lane to modernity. Gwadar, the deep-sea port at its heart, was to be the shimmering jewel of this Silk Road redux. Ten years and 78 progress review meetings later— a figure that boasts diligence while conceding futility— Gwadar sits parched and powerless. In February 2025, The Express Tribune reported that this linchpin of a multibillion-dollar dream lacks both clean water and reliable electricity. The transformation never came. Only fiscal scars remain. Pakistan’s external debt now stands at $130 billion, according to the IMF, ballooning under CPEC’s weight. Annual debt servicing alone devours over 50 percent of export earnings. Repayment is a distant fantasy— servicing it is a present nightmare.
Undeterred, Pakistan’s policymakers now pin their hopes on the Green Pakistan Initiative (GPI), a Special Investment Facilitation Council-led vision of corporate farming in the Cholistan Desert. With the same swagger once lavished on CPEC, the media blitz promises an agricultural revolution — millions of additional acres cultivated, 2-4 million jobs, and tens of billions of dollars in Gulf investment. The snag? Water — or the glaring absence of it. Cholistan, a windswept expanse of dunes and brackish groundwater, is hardly a natural fit for high-tech agriculture.
What binds these sagas is not ambition but delusion— the notion that borrowed billions and grand rhetoric can defy reality. The reality is this: Pakistan’s child stunting rate stands at 38 percent, rising to over 60 percent in the poorest rural areas. According to the World Bank, the illiteracy rate hovers at 38 percent, and 25.4 million children— one in three between ages 5 and 16— are left out of school. Learning poverty exceeds 78 percent. That’s 16 percent points above South Asia’s average— and 19 points above lower-middle-income countries. These are not mere statistics, but bodies and minds stunted before they can dream of modernity. The Dickensian human capital toll discourages investment in sectors driving modern economies.
For the people of Pakistan, the only hope — if it can be called that — lies in the charade finally collapsing under its own weight. It is a bleak prospect but one that carries a perverse logic: only when the edifice buckles will there emerge the political resolve to rebuild it. Until then, the economy will drift, welfare worsen, and forecasts keep being revised downward.
Such is the fate of a nation trapped in its own inertia.
– Javed Hassan has worked in senior executive positions both in the profit and non-profit sector in Pakistan and internationally. He’s an investment banker by training.
