Amir Khan

Pakistan’s growing population outpaces its economic growth, presenting a dire situation that requires urgent intervention. Talking to WealthPK, Dr. Ahsan Sathi, an economic researcher at the Pakistan Institute of Development Economics (PIDE), said the current annual population growth rate of 2.5 percent had exacerbated economic stagnation, with the growth rate failing to keep pace. Shockingly, 40 percent of children under age five are stunted, and over 20 million children are out of school, reflecting a grim social reality. He said inflation had doubled in the last five years, eroding purchasing power, while the nation witnessed a decline in productive capacity. Alarmingly, consumption constitutes almost 100 percent of the total GDP, primarily fuelled by foreign-currency-denominated imports. Electricity consumption per capita remains stagnant, rendering it unaffordable for both households and industries to generate economically competitive products. The economic model relies heavily on import-driven consumption, exacerbating dependency on external debt, sourced from multilateral institutions and friendly nations. This reliance puts economic growth on a precarious pedestal, subject to the availability of external debt, with the absence of which growth collapses below population growth levels, impacting incomes and purchasing power.

He emphasized, “As the nation grapples with these economic challenges, there is a conspicuous absence of a coherent policy guidance from the political parties.” He further said that the absence of a dedicated economic or social policy framework in the political parties reflected a leadership that’s still tied to the outdated paradigms of the 1990s, failing to adapt to the demands of the 21st century. Talking to WealthPK, Dr. Ali Salman, Executive Director of the Policy Research Institute of Market Economy (PRIME), said the lack of a comprehensive economic plan had led to a reactive decision-making process, often necessitating engagement with the International Monetary Fund (IMF) for financial support. “Absence of a long-term policy framework at both political and bureaucratic levels results in a continuous cycle of delay. Without a paradigm shift in policy direction, the country is heading towards a severe economic crisis,” he emphasized. Concluding, he said the absence of a sustainable policy framework threatens to push the majority of households to the verge of crisis. Time is running out, and the demographic dividend risks transforming into a demographic liability, compounding the existing problems into existential threats.

INP: Credit: INP-WealthPk