Pakistan’s economy is facing a stark reality check as its investment-to-GDP ratio plummets to a dismal 13.8 percent in 2025, marking the lowest among major Asian economies. This figure lags far behind regional rival Bangladesh’s 22.4 percent and stands in sharp contrast to powerhouses like India and Vietnam, both boasting rates above 30 percent.
The decline underscores deep-seated structural issues plaguing Pakistan’s investment climate. Even at its peak in fiscal year 2022, the ratio peaked at just 15.6 percent before sliding to 13.1 percent in 2024. Economists warn that such low investment levels severely hamper growth potential, leaving Pakistan trailing its neighbors in the race for economic dominance.
Bureaucratic red tape remains a major hurdle. Launching an industrial project requires navigating around 25 regulatory approvals, dragging out timelines and injecting uncertainty into the process. Corporate leaders express private frustration with the Investment Facilitation Council, meant to streamline operations through a single-window system, but criticized for stifling innovation with excessive rigidity.
Export figures paint a similarly troubling picture. Shipments dropped from $2.85 billion in October to $2.32 billion in December, only rebounding slightly to $3.06 billion in January 2026. Meanwhile, imports hover between $5-6 billion, widening the trade deficit and straining foreign reserves.
Research economist Mariam Ayub from the Policy Research Institute of Market Economy (PRIME) highlights the anomaly: ‘Pakistan’s investment ratio is structurally isolated from the region. Even economies facing shocks maintain far higher levels, pointing to profound domestic barriers rather than temporary setbacks.’
As political claims of stability ring hollow amid hybrid governance, Pakistan must dismantle these obstacles to revive investor confidence and spur sustainable growth. The path forward demands bold reforms to catch up with Asia’s dynamic economies.