Pakistan’s Economic (2024-25) Survey Reflects Governance Challenges
Pakistan’s Economic Survey 2024-25 presents a pattern of unmet targets and slower-than-expected growth. The country’s GDP growth of 2.68% fell short of the 3.56% target, highlighting continued challenges in achieving economic potential. The agricultural sector, which contributes nearly 24% of GDP, contracted by 13.5% in major crops, primarily due to water shortages and planning inefficiencies. This decline alone reduced overall GDP growth by 0.6 percentage points. Additionally, large-scale manufacturing has faced difficulties for three consecutive years, contracting by 1.5% against a growth target of 3.5%. The services sector, representing 59% of GDP, achieved a growth of 2.9%, below the 4.1% target.
These figures suggest an economy that has struggled to reach its full potential. However, the factors behind this stagnation are not limited to immediate economic challenges. Pakistan’s non-compliance with the European Union Generalized Scheme of Preferences Plus (GSP+) conditions further illustrates governance issues that have affected economic performance. The GSP+ arrangement, which has granted Pakistan preferential trade access to European markets for a decade, significantly boosted exports to the EU. However, the country has faced difficulties in fully implementing the 27 international conventions on human rights, labor rights, environmental protection, and good governance that underpin this arrangement. The Ministry of Commerce estimates that losing GSP+ status could cost Pakistan up to $2 billion annually, though the government has yet to prioritize substantial reforms in this area.
The allocation of resources for key sectors such as education exemplifies concerns regarding government priorities. Pakistan allocated only 0.8% of GDP to education in fiscal year 2024-25, significantly below international standards. The national literacy rate stands at 60.6%, with a gender gap where male literacy is at 68%, while female literacy is 52.8%. This gap in educational attainment can have long-term implications for economic growth, particularly as it limits the development of human capital. The relationship between educational underinvestment and economic stagnation is also reflected in labor market trends, where women’s labor force participation remains below 21%, compared to 68% for men. This underutilization of human resources suggests significant untapped potential in the workforce. Additionally, child labor affects over 13% of children in regions such as Punjab and Gilgit-Baltistan, with a substantial number of child laborers employed in hazardous conditions.
Healthcare spending has also been a point of concern, with less than 1% of GDP allocated to the sector, despite a population exceeding 230 million. Pakistan has only one doctor for every 751 people, and healthcare access remains limited, especially in rural areas. The country’s infant mortality rate stands at 50 per 1,000 births, indicating ongoing challenges in public service delivery. These healthcare and education deficits have implications for workforce readiness and long-term economic growth, particularly in addressing the challenges posed by modern economies.
Governance challenges also extend beyond economic policy and include concerns regarding civil liberties and human rights. Issues such as military courts trying civilians, enforced disappearances, and restrictions on press freedom contribute to an environment that can deter investment and innovation. Pakistan ranks 150th out of 180 countries on the World Press Freedom Index, and the Commission on Forced Disappearances has received nearly 10,000 cases since 2011, with over 2,200 still pending.
Discrimination against religious minorities remains another critical concern, with reports indicating that public sector job quotas for minorities remain largely unfilled, except for lower-level positions. Religious minorities represent a disproportionate percentage of individuals employed in low-skilled sanitation jobs. Additionally, there were 78 reported cases of forced conversions from religious minorities in 2021, with a significant proportion involving minors. These practices not only raise human rights concerns but may also affect Pakistan’s overall economic potential by limiting the contributions of certain sectors of society.
The performance of the industrial sector has mirrored the broader challenges in governance. Mining and quarrying contracted by 3.4% against a growth target of 5%, continuing a pattern of underperformance. Large-scale manufacturing has also experienced persistent challenges, reflecting deeper institutional weaknesses rather than purely cyclical factors. The government’s response to these issues highlights concerns regarding its approach to reform and prioritization of key sectors.
The recommendation for a Prime Ministerial visit to Brussels focused more on defense and security partnerships rather than human rights and economic reform, signaling the government’s focus on short-term diplomatic gains. This approach could affect the country’s ability to retain access to the European Union’s preferential trade status. As the EU expands GSP+ conventions from 27 to 32, Pakistan will need to reapply for continued benefits, with the next biennial review in 2025 serving as a crucial point for determining the future of this trade arrangement.
Pakistan’s economic stagnation and challenges with GSP+ compliance are closely linked. Both reflect a state that has yet to invest sufficiently in its people, protect human rights, or create an environment conducive to sustainable development. Issues such as the agricultural water crisis, manufacturing decline, and service sector underperformance are all symptoms of deeper governance issues that also include human rights violations, educational neglect, and discrimination. To overcome these challenges and ensure long-term growth, addressing these fundamental governance concerns will be essential for Pakistan’s future economic trajectory.
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The views and opinions expressed in this article are those of the author and do not reflect the official stance of Khaama Press. All data and statistics are sourced from public reports and articles, and while every effort has been made to ensure accuracy, Khaama Press assumes no responsibility for the content of the article.
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