By the end of the firs quarter of the 21st century, the world had become a far more uncertain and volatile place than it was at its outset. Yet, despite conflicts, shocks and growing complexity, many countries, especially emerging economies, managed to sustain growth and make a significant dent in extreme poverty.
Pakistan also recorded progress, most notably in digitisation and connectivity. However, it has consistently underperformed relative to global peers and regional neighbours. In fact, the gap in key economic and social indicators has widened, reflecting difficulties in striking the right policy balance and restoring credibility with an increasingly anxious public and reluctant investors.
Comparable, credible and comprehensive datasets on long-term global and regional averages for key indicators such as growth and poverty are not readily accessible. Nevertheless, available online estimates consistently show Pakistan lagging not just globally but also regionally.
Over the past 25 years, South Asia averaged growth of about 5.7 per cent compared with roughly 3.7pc in Pakistan. Average poverty is estimated at around 35pc in Pakistan, versus about 20pc regionally, while per capita income remained in the $1,000–1,300 range, well below the $1,800–2,500 recorded in South Asia.
Pakistan has ample human and intellectual resources, but ad hoc decisions and weak implementation prevent these strengths from translating into sustained outcomes
Pakistan also trails behind on most economic indicators, foreign exchange reserves, exports and industrial, agricultural, and service competitiveness, as well as social outcomes such as education, gender parity, health and employment, despite rapid gains in digitisation and connectivity.
Those who argue that Pakistan’s negative outlook is deliberately exaggerated have largely failed to substantiate their claims. While opinions among experts and business leaders vary, none disputed the broad direction of the indicators; they pointed to deeper structural causes. A senior member of the government’s economic team, speaking anonymously, blamed the political preoccupation and lack of sustained focus on growth for the poor outcomes.
A former minister went further, describing the government as part of the problem rather than the solution. “The establishment has kept the economy shackled. Each time a shift towards the market is discussed, more layers of regulations and regulators are added.
“Where there was once a ministry of power, we now have Nepra [National Electric Power Regulatory Authority], Ogra [Oil & Gas Regulatory Authority], and numerous other regulators crowding out the private sector. No serious investor will commit capital as long as the state continues to interfere in business the way it does,” he said.
Dr Nadeem ul Haq, former federal minister, attributed Pakistan’s failures to a constitutional framework that entrenches winner-takes-all politics and perpetuates dynastic rule, operating through an outdated colonial governance system.
Ehsan Malik, CEO of the Pakistan Business Council, identified Pakistan’s failure to organise its economy around export competitiveness as a single overriding reason for its relative underperformance. Rather than building capacity to produce tradable goods and services on a global scale, the country relied on consumption-led growth, protected domestic markets, and recurring external borrowing. This model repeatedly triggered balance-of-payments crises, macroeconomic instability, and stop–and–go growth, deterring investment. Weak exports also translated into low-quality job creation, persistent poverty, and limited fiscal space for human development.
While digitisation has improved connectivity and service delivery, in the absence of an export-oriented strategy, it has largely fuelled consumption rather than productivity. Mr Malik argued that, aligned with competitiveness, digitisation can reduce transaction costs, link firms to global markets, enable service exports, formalise businesses, and raise productivity across industry and agriculture. Embedded in an export-led framework, it can shift growth towards jobs, resilience, and foreign-exchange earnings.
Nasim Beg, a senior executive who sits on several corporate boards, views the widening income disparity as the root of Pakistan’s problems. “We have failed to address our deep-rooted class divide, relying on the hope of trickle-down effects instead of taking direct action,” he said.
Khurram Mukhtar, Patron-in-Chief of the Pakistan Textile Exporters Association, attributed Pakistan’s underperformance to the absence of policy continuity and institutional credibility. He said frequent reversals of economic, fiscal, and industrial policies across political cycles erode investor confidence and retards long-term planning.
As a result, reforms fail to mature, incentives are distorted, compliance is penalised rather than rewarded, and the economy remains trapped in short-term stabilisation. Digitisation improves connectivity, but without predictable rules and strong institutions, it cannot deliver productivity, jobs, or inclusive growth.
Moreover, Abdul Aleem, Secretary General of the Overseas Investors Chamber of Commerce and Industry, also identified the persistent lack of policy continuity as the central problem. “Pakistan has ample human, intellectual and physical resources, along with well-developed reform blueprints, but ad hoc decisions, frequent reversals, and weak implementation prevent these strengths from translating into sustained outcomes, like a powerful engine running on few cylinders.
“This inconsistency erodes state capacity and investor confidence, as businesses depend on predictability in tax regimes, energy policies, trade frameworks and regulatory frameworks. Abrupt policy shifts raise costs, deter long-term investment, and limit job creation, leaving gains such as digitisation unable to deliver broad productivity gains or inclusive growth.”
Nusair Teli, CEO of Pepsi Pakistan and a representative of the new generation of business leaders, was blunt in his assessment. He attributed Pakistan’s stalled development to chronic political instability and egregious mismanagement, arguing that the pursuit of power has displaced responsibility. “Institutions have been overburdened with political appointments, while citizens are taxed to fund them,” he said.
While acknowledging the country’s misfortune with leadership, he concluded that societies ultimately get the leaders they produce, raising a deeper question about the collective lack of will to demand and sustain better governance.
Published in Dawn, The Business and Finance Weekly, January 19th, 2026