WITH the Trump administration’s trade war on China and the rest of the world having led to global economic uncertainty, the Asian Development Bank’s advice for Pakistan’s policymakers to stick to the reforms agenda agreed with the IMF comes at the right time. Reminding our policymakers of the several downside risks to the country’s hard-won but fragile economic recovery, the lender has projected that the national economy will expand at the much slower pace of 2.5pc during this fiscal year compared to the average South Asian growth rate of 6pc. How Donald Trump’s trade war will impact these growth estimates if protectionist US policies push the global economy towards recession is anybody’s guess. The report has not taken into account the ramifications of the insanely high American ‘reciprocal import levies’ in its projections. But both the IMF and State Bank have highlighted lately the uncertain global environment as a risk to the country’s struggle to overcome its economic crisis.

That debt-ridden Pakistan faces several vulnerabilities despite its improved external position and a quicker-than-anticipated drop in inflation shows that the country must stay on the path of structural reforms, even more so after the punitive baseline and higher tariffs slammed by the US on most of the world. In its latest Asian Development Outlook report, the lender noted that recovery requires policy consistency and reform implementation to sustain it, build resilience and enable durable growth. Macro improvements, it warns, must not lead to a relaxation of policies and deviation from the reforms path, which could potentially trigger new balance-of-payments pressures, and jeopardise our hard-earned stability and disbursements from multilateral and bilateral partners. The potential negative impact of the Trump tariffs on the global economy will likely spill over into Pakistan too, especially if the tariff war between the US and China does not end soon. The emerging global landscape demands that Pakistan navigate this challenge carefully because of its reliance on both the US and China. With major economic challenges facing the country amid rising militancy, it is crucial for politicians to work out a formula to resolve their selfish disputes and join forces to deal with the emerging situation. The ongoing economic slowdown has affected the average Pakistanis the most in recent years. They deserve better days now.

Published in Dawn, April 14th, 2025