The finance minister recently presented the Pakistan Economic Survey 2024–25 with a tone of accomplishment, celebrating a six-decade low in inflation. At first glance, this appears to be good news for a country where millions continue to live below the poverty line.
Indeed, any positive shift in macroeconomic indicators should be welcomed but only if it stems from meaningful, sustainable reforms. Unfortunately, that’s not the case. We are walking a precarious path, chasing the illusion of economic stabilization while ignoring the deep-seated flaws in our system. It’s a dangerous approach, one that treats the symptoms, not the disease, and sets us up for future failures.
Take agriculture, not just a sector, but Pakistan’s lifeline. Nearly 70 percent of our population relies on it, directly or indirectly.
Yet, it continues to be sidelined. According to official data, major crop production declined by 13 percent this year, which is not a marginal slip, but a clear warning sign. The wheat crisis illustrates how political considerations repeatedly trump national interest.
A failure to ensure fair pricing, combined with rising input costs like electricity and urea, has pushed farmers to the brink. With each planting season, they face higher risks and fewer rewards, definitely crushed by policy neglect dressed in populist slogans. If we cannot protect the very people who feed the nation, what kind of economic growth are we aiming for?
The government’s GDP growth target of 3.56 percent, already modest compared to our historical average of 4.5 percent%, wasn’t even met. Blaming global headwinds masks a more uncomfortable truth: internal mismanagement and misplaced priorities. We keep pumping money into politically motivated but economically unproductive ventures, while high-return sectors like SMEs, technology, and export industries are left gasping for support.
Our national budget is a reflection of this short-termism. Political optics consistently take precedence over long-term planning. As a result, the engines of real growth are being starved of fuel, while flashy but unsustainable projects grab headlines.
Another fundamental weakness lies in our ever-expanding informal economy. Rather than integrating it into the formal structure, our policies encourage its continued existence. It’s no secret that countless businesses operate without paying taxes or following regulations.
Meanwhile, those who try to play by the rules are penalized burdened by audits, red tape, and higher taxes. In time, many either shut down or are forced to go underground just to survive. Unfortunately, budget 2025 followed by this Economic Survey has the fewest initiatives to increase the tax base.
The policy is taxing the already taxed. What’s worse is that the very institutions tasked with revenue collection often enable this dysfunction. Whether through neglect or collusion, their inaction erodes faith in the system and entrenches the culture of non-compliance.
The services sector fares no better. Consider Pakistan’s fast-growing freelance and remote work industry, driven by one of the youngest populations in the world. These digital workers require no subsidies and free laptops but just a clear, supportive policy environment. Yet they are met with uncertainty over payment gateways, taxation, and regulatory hurdles. Frustrated by the culture, many route their financial operations through Gulf countries, depriving Pakistan of valuable foreign exchange and economic potential.
This is a tragic missed opportunity. With minimal effort, the government could unleash the power of this low-cost, high-yield export sector, generating jobs boosting foreign earnings, and empowering the youth.
Instead, what we see is over-regulation, lack of trust, and a bureaucratic mindset that scares away innovation. Gen Z, inherently comfortable with digital finance, is a natural ally in our effort to document the economy. But rather than incentivizing their participation, the state often treats their financial activity with suspicion. The result? Fear, not confidence. Disengagement, not inclusion.
If we’re serious about formalizing the economy, we must start by winning public trust, simplifying compliance, and offering incentives rather than penalties.
We’ve spent far too long lurching from crisis to crisis, mistaking temporary stability for genuine progress. What we need is structural transformation: bold reforms in agriculture, taxation, regulation, and service sector development. We need to stop punishing those who follow the rules and stop rewarding those who don’t.
We must shift our mindset from election cycles to generational thinking. Because the truth is: Pakistan has immense potential. We have the land, the talent, the youth, and a strategic location. But unless we address the foundational issues, surface-level improvements will do little to prevent long-term decline.
Our economic managers must rise above the habit of number-polishing and narrative-spinning. The real challenge is not to lower inflation for a quarter, but to build a fair, inclusive, and future-ready economy.
We don’t need miracles. We need meaningful change and the courage to pursue it.
Copyright Business Recorder, 2025