‘Existing economic model no longer capable of delivery’

KARACHI: The Chief Organiser of the Pakistan Business Forum (PBF), Ahmad Jawad, has declared that Pakistan’s existing economic model is no longer capable of delivering sustainable growth, calling it “structurally broken” and urging policymakers to shift their focus from temporary stabilisation to long-term productivity and competitiveness.

While talking to President FPCCI Atif Ikram, Jawad referred to the World Bank’s Pakistan Development Update, which warns that the country’s economy has become fundamentally uncompetitive.

He highlighted that Pakistan’s exports, which once stood at nearly 16 percent of GDP in the 1990s, have now fallen to around 10 percent.

This decline, he said, represents an estimated loss of almost 60 billion US dollars in potential exports every year, underscoring the scale of economic inefficiency and missed opportunity.

According to Jawad, the country’s growth pattern has for decades been shaped around survival rather than progress.

He said Pakistan continues to rely on consumption, speculation and informal trade, while neglecting productivity, value addition and industrial scaling.

“Our policies are built around crisis management. We have normalised mediocrity, and as a result, we are neither producing competitively nor creating jobs at the pace required by our growing population,” he remarked.

He observed that the business environment has become increasingly hostile for the formal sector, particularly exporters, due to rising taxes and unpredictable regulations. The recent withdrawal of the 1 percent turnover-based final tax regime, replaced by a tax burden of nearly 40 percent once all levies are included, has, in his view, further eroded the competitiveness of export industries.

“Instead of encouraging exports, we have effectively taxed them out of the market,” he stated.

Jawad noted that the World Bank has identified several core weaknesses that prevent Pakistan from competing internationally.

These included high energy costs that raise industrial expenses, a complex regulatory structure that deters investors, inconsistent policymaking that discourages long-term commitments, and a taxation framework that favours informality while punishing compliance.

He also expressed concern that IMF stabilisation measures, while addressing short-term fiscal imbalances, are squeezing the productive base of the economy. “The contradiction is clear,” he said.

“The World Bank calls for reforms to build competitiveness, while the IMF focuses on austerity. We cannot tighten our economy into prosperity. Growth must come first.”

Drawing comparisons with regional success stories such as Vietnam, Bangladesh, and Malaysia, Jawad said Pakistan must learn from economies that have embraced export-led development, technology adoption and industrial modernisation.

“These countries restructured their policies around competitiveness and continuity. Pakistan must decide whether it will continue to shrink under pressure or rise by reforming its foundations,” he emphasised.

Jawad called on the government to adopt a growth-first mindset that focuses on reducing the cost of doing business, ensuring policy consistency, stabilising energy pricing for industry, and creating a credible investment climate.

He stressed that taxation must encourage formalisation rather than drive businesses underground, and that industrial policy should prioritise innovation and export orientation.

“Pakistan cannot stabilise its way into prosperity. We must grow our way out of instability,” the PBF chief concluded.

Copyright Business Recorder, 2025