Fluctuating economy of Pakistan

Pakistan has frequently undergone macroeconomic crises, which is reflective of a growth paradigm reliant on personal and governmental consumption, with very little contribution from productivity-enhancing investment and exports.

Over the past two decades, Pakistan has achieved significant poverty reduction, but human development outcomes have lagged while economic growth has remained volatile and slow. Between 2001 and 2018, a surge in migration and related remittances, the expansion of off-farm economic options, and over 47 million Pakistanis were able to flee poverty. With high levels of stunting at 38% and learning poverty at 75%, human capital outcomes have remained poor and static despite dramatic poverty reduction.

GDP growth per person has been slow, averaging only about 2.1 percent yearly from 2000 to 2018.

In early FY23, Pakistan’s economy was undergoing an overdue adjustment, as it recovered from the impacts of COVID-19. The economy grew by 6.0 percent in FY22 thanks to accommodating macroeconomic measures. Severe external imbalances were a result of high local demand, weak productivity growth, high global commodity prices, and the global economic slump. The government started implementing a number of policies to limit aggregate demand in order to stabilize the market, including a recessionary budget and increases in administered energy prices.

Growth was predicted to decrease as a result of stabilizing efforts, and the exchange rate, total public debt, and foreign exchange reserves were predicted to all progressively decline from their current high levels.