Last two years worse in Pakistan’s economic history: Atif Mian

Atif Mian, a noted Pakistani-American economist and currently a professor of Economics, Public Policy and Finance at Princeton University, said that Pakistan is stuck in a “poverty trap” and the only way out of it is through “a big policy change”.

In a series of posts on social media platform X, formerly known as Twitter, on Saturday, the economist highlighted that there is increasing evidence that Pakistan is stuck in a poverty trap “due to decades of malpractice”.

“Poverty is a terrible thing - but it always comes with a silver lining,” he stated.

“Poor people are willing to work for less, and knowledge they can use to be more productive is already out there. If only a government can help harness this natural advantage, growth and prosperity follows, as countries like Vietnam and Korea have shown.

“To put it differently, it takes effort to suppress growth for long periods of time. But some countries manage to do so through their collective decisions, and remain stuck in what economists refer to as a “poverty trap”. There is increasing evidence that Pakistan is stuck in such a trap due to decades of malpractice,” said Mian Atif.

Pakistan ‘is bankrupt’ and ‘sinking deeper every year’: Atif Mian

Citing data from the 1980s, the economist noted that Pakistan’s growth rate has progressively declined. In fact, the economy is stagnating, “Pakistan is stuck in a poverty trap”.

Atif Mian said the last two years have been the “worse in Pakistan’s economic history”.

“I plot annual inflation and per-capita GDP growth for each year since 1980 below. 2023 and 2024 stand-out - never has inflation been this high and growth this low. The closest years are global crises of 2009 and 2020, but the recent two years are purely the country’s own making,” he said.

“Is this just statistics?” questioned Atif.

“I have personally never seen as much hopelessness on the streets of Pakistan as now - it seems that anyone who can, wants to leave the country. There is some credence to this perception of mine…. The number of people searching for visas abroad has skyrocketed,” he said.

Atif noted that the thing about poverty traps is that they are “traps” - meaning incremental change cannot take you out of your misery.

“The only way out of poverty traps is through a big policy change - a change that is coordinated and credible over a sustained period of time. I’ll talk about what this means in the future.

“For now, it’s business as usual in Pakistan. And that is terrible news for its people,” he said.

‘Nonsensical’: economist Atif Mian slams Pakistan govt’s policies

The development highlights issues plaguing Pakistan’s economy that has for decades struggled to attract and retain investment. Its constant run-ins with instability, inconsistent policymaking, and a general knack of increasing expenditure in non-productive sectors have pushed away investors that do not see the population of over 240 million as a viable enough market. Bailouts with the International Monetary Fund (IMF) are a frequent event, and the economy has stayed more susceptible to shocks than regional peers.