By S. Akbar Zaidi
Published in Dawn on December 19, 2025
PAKISTAN is in decline — in serious, considerable and sharp decline — as manifested by its economic, social and human development indicators. This decline is both relative to other comparable developing countries which have now steadily and increasingly outpaced Pakistan as indicated by multiple indicators, and by what Pakistan’s own indicators used to be. In other words, the economy and related and ancillary sectors, especially in human and social development, are worse now than what they were some years or decades ago. To make matters worse, Pakistan’s recent political economy reorganisation, centralisation and consolidation will ensure that these indicators deteriorate further.
The simplest and most basic indicator which encompasses economic growth, the real GDP growth rate, has been falling consistently over the last four decades and it is improbable that this long-term decline in GDP will be significantly reversed. From highs of near and above six per cent per year, this secular decline has led to a growth rate of barely 3pc. In fact, just in the last six years, GDP growth has been negative in two of those years, minus 1.3pc in 2019-20 and again minus 0.2pc as recently as 2022-23.
It is worth adding that on average, the population in Pakistan has been growing by 2.6pc annually over the last decade, and hence in real terms Pakistanis are worse off. Importantly, in just 25 years, Pakistan will become the third most populous country. At least on one count, there is huge progress and our population multiplies; over the last many years, our population growth rate has been much higher than economic growth.
Beyond these very basic numbers and economic growth rate and population trends, things are even more worrying. When one considers human development, the quality of Pakistan’s 250 million population has been falling markedly. In terms of the UN’s Human Development Index, Pakistan has gradually fallen in position. In 2020-21, Pakistan was ranked 161, in 2023-24 it fell to 164th and in the latest index it has fallen to 168th place, clearly a very considerable and sharp decline.
The PM has declared that Pakistan’s economy ‘is out of the woods’. Clearly, he is looking at a different field of woods.
Crucially, when it comes to women, unconditionally at the core of any development, social, economic or population strategy, things have deteriorated even further. The Global Gender Gap Report 2025 shows that Pakistan is ranked the lowest — 148th out of 148 countries — and has fallen three positions since 2024. Pakistan is ranked in the lower-middle income countries with 16 countries much poorer than Pakistan, yet its ranking is even lower than these countries and is the lowest of all 148 countries in terms of gender ranking. Female labour participation remains very low and access to finance is a major issue. By delaying putting women at the centre of every policy and strategy, Pakistan’s slide will be accentuated.
Every government official parrots the ambition of being ready for the revolution that has taken place in communication and information technology; they cite ideas related to AI which most have not even been able to grasp fully. Yet, Pakistan’s secondary enrolment rate today is at the level where South Korea’s was in 1972, while Pakistan’s tertiary enrolment rate today is where South Korea’s was in 1979. These are astonishing numbers, which show that in terms of human capital, so critical for the information and technological age, Pakistan is half a century behind South Korea. With even basic literacy, reading and numeracy skills lacking, we are decades behind other countries and this distance will increase over the next few years.
The prime minister has just declared that Pakistan’s economy ‘is out of the woods’ and the crisis is over. This, at a time when data shows that unemployment in Pakistan today is 7.1pc, the highest in 21 years, with 5.9m people unemployed of which 4.6m are illiterate. Moreover, those who remind us of a ‘demographic dividend’ from having a young population, need to be told that the highest unemployment is amongst those aged 15-29 years, with 3.5m young men and women entering the job market every year. Moreover, research has shown that even for those who work, the real wage of workers in Pakistan has fallen by almost 20pc in the last three years. With the overall investment-GDP ratio the lowest since 1973, at a mere 13pc, and declining further, any hope of reviving the economy seem completely absent. Clearly, the PM is looking at a different field of woods.
Relative to our peers and neighbouring countries, Pakistan is being further left behind. At the recently concluded DawnMedia Conference on Population, economist after economist showed data which emphasised the dismal state of Pakistan’s economy compared to others. Dr Hanid Mukhtar presented figures showing that in 1990, the per capita income of Pakistan was twice that of Bangladesh and 56pc higher than that of India. In 2024, Bangladesh’s per capita income is 53pc higher, and that of India is 71pc higher than that of Pakistan. Moreover, he showed how the growth of Pakistan’s per capita GDP has been lower than that of Bangladesh by 3.5pc per annum, and 3.2pc vis-à-vis India. These significant gaps will grow further, and any attempt to catch up will be outpaced by all other countries around us and in the region. Pakistan is on a losing streak, compared to its own past and compared to other countries which were once less developed than Pakistan.
Given these trends, all of which are downward — and there are a multitude of other datasets amplifying them — signifying relative and absolute deterioration, many economists feel that things have never been this bad. We have all used terms like ‘critical juncture’ or ‘crises’ at numerous points in the past, but perhaps in a highly globalised and competitive world, things may never have been where they currently are. Stabilisation has morphed into stagnation. Given the focus of those running Pakistan’s political economy and making decisions, there is no confidence in either their ability or vision to reverse these trends.
