An economy’s trajectory is significantly impacted by its political instability. Pakistan is no stranger to the ailment with political crises playing a recurring role in the history of the country since its inception. This is evidenced by the fact that in the 77 years of its existence, the country has yet to see a prime minister completing a full five-year term in office. Instead it has fallen prey to frequent and premature toppling of civilian governments, disputes among political parties and struggles with maintaining democracy. This political unrest has disrupted democratic transitions bringing about uncertainty and inconsistency in policy-making and their execution. The period from 1947 to 1990 saw an average annual growth rate of 6%, but political volatility caused frequent shifts in conflicting policies, leaving lasting repercussions. The 1960s witnessed rapid industrialization and a 5.82% average growth rate; however, stark regional disparities and wealth concentration among the “22 families” fueled economic inequality. These disparities led to Zulfiqar Ali Bhutto’s socialist agenda gaining popularity among the masses, promising greater equity and redistribution of resources. Hence, the 1970s brought a drastic shift in economic policy with nationalization projects eroding private-sector confidence and expanding bureaucratic control. The secession of East Pakistan, largely inevitable by the late 1960s, dealt a devastating blow to the economy. The loss of East Pakistan’s export potential and the withdrawal of foreign aid by donors caused the economic strain. The 1980s saw average growth peak at 5.88%, driven by privatization efforts and foreign aid. However, the imposition of extremist laws, as a part of the regime’s efforts to implement its understanding of Sharia Law, brought along ethnic and sectarian upheaval. The involvement in the Soviet-Afghan War resulted in flourishing informal economies that dealt in narcotics and arms and led to heavy reliance on US aid, crippling the economy’s self-sufficiency. The 1990s were turbulent to say the least. It was a decade which refocused on policies of deregulation and privatization but was marred by frequent dismissals of governments on charges of corruption and misuse. Rising ethnic and political unrest in Karachi adversely affected business confidence. Previously the lifeline of the economy, US aid was withdrawn after the end of the Afghan war. The incidence of poverty had nearly doubled from 18% in the late 80s to 34% by the late 90s. The nuclear tests of 1998, meant to provide security, instead created vulnerability through the imposition of international sanctions. The freezing of foreign currency accounts of residents and non-residents hindered business and investor confidence. It also heightened Pakistan’s risk profile, discouraging foreign direct investment (FDI). Political stability plays a vital part in influencing FDI, which is a key driver of growth in terms of capital inflow, job creation, and improved technology and infrastructure. The nuclear sanctions and political instability of the 1990s played a major role in FDI inflows declining from $601.3 million in 1998 to $322.5 million in 2001. Instead of stabilising, Pakistan faced economic isolation, further fuelling its vicious cycle of instability, poverty, and stagnation. By the 1990s Pakistan became the slowest growing country in South Asia, with the growth rate declining to 4% The political unrest since April 2022, triggered by the ousting of a former prime minister, widespread PTI protests, and an increasingly unpopular government, continues to undermine stability. It’s been nearly three years since the economic crisis caused by the political upheaval in 2022. Inflation decreased to 4.1% in December 2024 after peaking at 38% in May 2023. The State Bank of Pakistan (SBP) expects it to fall further in January. Though this may appear favourable, the sharp decline may also signal slow growth. The 10-year-high current account surplus, the interest rate decline to 13% and recent exchange rate stability seem to be relatively optimistic macroeconomic indicators. Moreover, recent developments like Punjab welcoming a $700 million Chinese investment, the UAE agreeing to rollover a $200 billion debt, and the unveiling of the government’s rather ambitious five-year economic plan projecting Pakistan as a trillion-dollar economy by 2035, point towards a possible recovery. The country’s economic history has repeatedly shown that political harmony is crucial for progress. For these recent efforts and projections to bear fruit, consistent governance and clear policy direction are imperative.