In a concerning development for Pakistan’s rapidly expanding population, the International Monetary Fund (IMF) has slashed its GDP growth projection for the country from 3.2% to 3%. This adjustment, highlighted in recent Pakistani media reports, underscores the fragility of an economy heavily reliant on external lifelines.
The first five months of the current fiscal year painted a grim picture for large-scale manufacturing, which contracted by 1.25% in real terms. Exports have also lost momentum, failing to provide the much-needed boost. Amid towering foreign debts and sporadic external aid, remittances from overseas workers stand as the sole dependable pillar, surging to a record $8.8 billion in the first quarter of fiscal year 2025.
However, experts warn that an economy tethered to foreign creditors’ whims and expatriate earnings cannot sustain long-term growth. IMF bailout conditions enforce harsh measures: higher taxes, slashed subsidies, and austere budgets. To lure foreign investment and shed the burden of inefficient state enterprises, Pakistan must embrace bold structural reforms.
Positive signs like a current account surplus, a stable rupee, cooling inflation, and easing policy rates offer some respite. Yet, this stabilization remains precarious, overly dependent on external interventions such as the UAE’s rollover of $2 billion in deposits to Pakistan’s central bank. Domestic policies deserve limited credit for these gains.
While short-term stability is welcome, low growth rates, meager investment, and lack of competitive industries threaten to unravel progress. Pakistan’s economic future hinges on genuine reforms to break free from this cycle of dependency and foster self-reliant expansion.