Kleptocrats keep Pakistan’s economy weak because real progress may cost them power and wealth

Pakistan's economy continues to struggle despite official claims of stabilization. Recent per capita GDP growth has stagnated near zero, placing the country near the bottom in South Asia. Income inequality is worsening, with the extreme poverty rate at 23%, surpassing regional averages. The economy remains heavily reliant on consumption (82%) and light on investment (14%), both among the lowest in the region.

Industry's share of the economy has remained stagnant for decades, lagging behind peers like India and Sri Lanka. Foreign investment is primarily directed towards domestic sectors, leading to reserve depletion and weak job creation. Domestic capital is underutilized, and the country lacks mechanisms to boost local savings. Exports have plummeted to just 10% of GDP, the second-lowest in South Asia, hindering trade balance and dollar earnings.

Remittances, while providing some relief, do not generate jobs or tax revenue and often contribute to consumption rather than investment. Tax revenues remain low, with only 11% of GDP collected, down from 33% in 2021-22. High public debt-to-GDP ratios, coupled with interest payments consuming a significant portion of federal budgets, leaves little room for growth investment.

The cycle of low investment, import-led growth, and ballooning debt perpetuates the nation's economic struggles. The underlying issue is a kleptocratic political system that thrives on maintaining power and wealth, often at the expense of genuine economic progress. Democracy and civilian governance are seen as the only means to introduce capable leaders who can champion sustainable development.