Economic Policy & Business Development

Pakistan does not just need more power generation capacity. It needs a power sector that can deliver affordable, reliable electricity. It relies on clean energy sources that should be cheap, yet consumers are forced to pay exorbitantly high electricity bills. Capacity payments and flawed power-sector arrangements undermine the cost advantage of renewables. The problem goes beyond the energy mix or capacity addition. Fragmented planning, flawed policies and distorted IPP contracts have created a system that fails to translate cheap generation into affordable electricity. The way forward: Renegotiate IPP agreements. Upgrade transmission and evacuation infrastructure. Integrate solutions for intermittency. Why must the public pay for the system’s inefficiency and neglect? @NEPRA5 @MoWP15 @PakPMO @WBG_Pakistan @PakistanADB

#Pakistan's chronic trade deficit is not simply a matter of rising imports. The deeper problem is that the country has been unable to generate enough diversified, high-value exports to finance its external needs. Over more than four decades (FY1980-FY2026), the #trade deficit has widened from $3.11 billion to an estimated $35.51 billion, after peaking at $40.90 billion in FY2021. In FY2026, #imports reached $76.39 billion against #exports of $40.88 billion, leaving a deficit of $35.51 billion. This structural weakness stems from an import-dependent, consumption-led growth model, combined with low-value, undiversified exports and entrenched structural constraints. @mincompk @MoIB_Official @GovtofPakistan

Once hailed as White Gold, #Pakistan’s #cotton sector is losing ground. Production has fallen from 14 million bales in FY15 to just 5 million in FY26, while ginning value added has declined by 20% since FY2000. Farmers are shifting to more profitable #crops, while cotton #imports are projected to reach 5.2 million bales in #FY27, adding pressure on foreign exchange reserves and the textile value chain. Shouldn’t #policymakers explore measures such as crop zoning and targeted incentives to boost cotton cultivation and revive the sector’s potential?

Pakistan’s SOEs are draining public money. They lose Rs 3.1 bn every working day, and 1 in every 6 federal rupees goes to them. In FY2025, support to #SOEs equaled 29% of the federal deficit. It’s time to prioritize privatization, stop the losses and take the government out of commercial activity. How long can #Pakistan afford to keep paying for losses?

#Pakistan’s transition toward electric mobility is gaining momentum, with the National Energy Vehicle (#NEV) Policy 2025–2030 setting a clear pathway for cleaner, more efficient, and energy-secure transportation. With a target of 30% of new vehicle sales being electric by 2030, alongside 3,000 charging stations, the roadmap highlights the potential of #EVs to reduce fuel dependence, emissions, and transport-related costs while supporting local manufacturing and sustainable economic growth. @ClimateChangePK @MinistryofST @Official_PetDiv

Pakistan’s inflation rate climbed to 10.3% in September 2026, with rural inflation at 10.5% and WPI rising sharply to 13.3%, outpacing regional peers such as Bangladesh, India, and China. Driven by higher fuel and electricity costs, transport expenses, and persistent supply-chain bottlenecks, rapidly rising prices are eroding household purchasing power as stagnant incomes struggle to keep pace. At the same time, high public borrowing and rising public debt are adding to inflationary pressures while crowding out credit to the private sector, creating a cycle of lower demand, weaker growth, and declining household welfare—deepening the low-income trap.

Between 2015 and 2025, Pakistan grew by an average of 3.7% a year, the slowest of the six economies benchmarked and well below the 5.5% average of its five peers: Bangladesh, India, Türkiye, Malaysia and Viet Nam. The same gap shows up in investment, at 15.2% of GDP against a peer average of 30%, and in exports, at 9.5% of GDP against 43.6%. The shortfall is not a pandemic artefact: Pakistan's 2020 contraction (-1.3%) was milder than that of several peers (down to -5.8%), yet its growth still trailed over the decade. This points to a structural rather than cyclical divergence, rooted in fiscal instability, external fragility, a weak enabling environment, high taxation, an anti-export bias, weak capital accumulation, and a high cost of doing business. Closing it requires a shift from consumption-led growth and a net-importing economy to investment-led growth and an export-oriented economy.

Pakistan’s trade deficit continued to widen in Q1 FY27, driven by stronger growth in imports than exports. Exports increased by 10.8% YoY, while imports rose by 13.2%, expanding the quarterly trade gap by 15.1%. External trade position remains under pressure as import growth continues to outpace export expansion. The widening trade gap points to persistent structural imbalances in the country’s trade account. Sustaining export growth will require greater competitiveness, lower production costs, and stronger integration into global value chains. Without a durable shift toward export-led growth, rising import demand will continue to constrain external-sector stability.