Pakistan’s economic growth is projected to be a modest 2.44% in the fiscal year 2024–25, showing only a slight improvement from last year’s 1.7%, according to the Lahore School of Economics (LSE) Modelling Lab. This forecast aligns closely with recent downward revisions by the Pakistan Bureau of Statistics and estimates by the World Bank, IMF, and ADB, highlighting the fragile nature of the country’s recovery.
The slowdown is primarily due to continued weakness in manufacturing and underperformance in agriculture. Large-scale manufacturing has contracted by 1.9%, while agriculture has expanded by only 0.56%, well below its long-term average. Sharp declines in key crop outputs—wheat, maize, sugarcane, rice, and cotton—have further dampened growth, driven in part by sudden government policy shifts such as the removal of support prices.
Inflation, though easing, is expected to average 8.37%—higher than government and IMF projections—due to rising energy costs and taxes. The LSE warns that tightening monetary policy to contain inflation may be stifling agricultural output, which is crucial to offset losses in manufacturing.
The persistent current account deficit and trade imbalances pose further challenges, as rising imports outpace exports. The LSE advocates a shift toward investment-led growth by easing capital goods imports while restricting non-essential consumer imports to boost local production capacity sustainably.
Overall, Pakistan’s economic recovery remains fragile, with urgent need for supportive policies to strengthen agriculture, manufacturing, and investment for long-term growth.