OPINION: Pakistan’s growth delusion

Few words dominate Pakistan’s economic discourse today more than “growth.” The term is invoked by authorities defending budgets, demanded by business chambers seeking relief, and urged by international partners negotiating bailouts. It has become the cure-all of policy debate, a reassuring promise that the economy will expand if only the right mix of reforms is applied.

Yet this confidence masks a deeper vagueness. Growth now functions less as a strategy than as shorthand for hope. For a population battered by inflation, stagnant wages, and repeated rounds of adjustments - higher taxes, rationalised subsidies, rising energy prices, tighter credit, and a depreciated, market-based exchange rate - that abstraction is wearing thin. For all its ubiquity, there is little clarity, and even less consensus, on what a growth strategy actually means.

Ask policymakers to define a strategy, and the answers dissolve into familiar slogans: stabilize the economy, expand exports, attract investment, reform energy. These are not strategies; they are aspirations, loosely stitched together and recycled across administrations. Pakistan does not suffer from a shortage of goals. It suffers from the absence of a coherent, durable direction for economic transformation. This gap is not semantic. It is structural.

Countries that sustained high growth, including South Korea in the 1970s, China in the 1990s, and Vietnam more recently, did not thrive on hope. Their states made explicit strategic choices by identifying the most binding constraints, prioritizing key capabilities, and aligning policy over time. Growth emerged not as a by-product of stability, but as the outcome of deliberate economic direction. Pakistan has never done this. It has mastered the art of survival, not strategy.

Much of Pakistan’s economic debate treats growth as a technical problem to be managed through incremental fixes, such as tweaking interest rates, adjusting tax brackets, and revising tariffs. But without a strategic horizon, reforms drift. Stabilization episodes come and go. Tax and tariff packages multiply. Sector plans are announced with regularity, yet they rarely change how sectors actually function—how firms invest, raise productivity, add value, or integrate into global markets. Too often, these plans rest on broad assumptions rather than credible modeling or serious analysis.

In successful economies, strategy precedes policy. In Pakistan, policy drifts without a strategic anchor. This pattern echoes the work of economist Dani Rodrik, who has warned that many developing countries fall into a cycle of “reformism without strategy”, pursuing isolated reforms without a clear diagnosis of what actually constrains growth. The problem is not a lack of reform effort, but the absence of prioritization. Growth accelerates not when everything is fixed at once, but when the most binding obstacles are identified and tackled first. Pakistan has rarely approached growth this way, opting instead for broad reform templates that promise change but rarely alter the economy’s underlying trajectory.

The current Extended Fund Facility with the International Monetary Fund (IMF) was necessary. It provided critical financing and helped avert an imminent balance-of-payments crisis. But IMF programmes are built for stabilization, not transformation. They impose fiscal discipline and restore short-term confidence, but they are not designed to expand an economy’s productive base or deliver sustained growth.

In Pakistan’s case, prolonged reliance on adjustments without a parallel growth strategy has weighed on investment and productivity. Repeated rounds of fiscal tightening and price correction may steady the economy in the short term, but they do little to expand its capacity to produce, compete, or earn. When growth remains weak, stabilization becomes fragile. Revenues disappoint, trade deficits widen, reform fatigue sets in, and debt pressures reappear despite continued policy restraint. Only sustained growth changes that equation; not by delaying adjustment but by ending the cycle that makes it necessary again and again.

There is also a persistent misunderstanding about capital. Borrowed foreign funds can steady an economy in the short run, but they do little for long-term prosperity unless they raise productivity. Only investment that transfers technology, builds skills, and improves how firms operate can change a country’s growth path. Too often in Pakistan, external money has financed consumption or filled fiscal gaps, buying time rather than building capability.

Part of the difficulty lies in how growth is understood. It is still discussed as a headline number - four percent, five percent, six percent - rather than as a process of economic change. Durable growth comes from shifts beneath the surface: firms becoming more productive, new activities taking root, and capital moving toward higher-value uses. Yet policy debate rarely specifies which of these shifts must occur or how they will be achieved. Questions of structure are deferred: how protection that shields inefficiency is dismantled, how insolvency is made credible, how firms adopt new technologies and skills, and how resources are steered away from administration toward production. In the absence of such clarity, growth targets remain slogans, disconnected from the way economies actually evolve.

This is why strategy matters. A credible growth strategy does not begin with a wish list. It begins with answers to three foundational questions: what is holding growth back, what must change first, and which institutions can make that change stick? Without answers to these questions, policy remains only reactive and growth episodic.

Pakistan’s experience reflects this gap. The economy expands and contracts with commodity cycles, capital inflows, and IMF-supported programs, but it does not structurally evolve. Reforms are debated intensely, yet rarely embedded in a broader theory of how the economy is meant to change over time.

Even when Pakistan adopts the right reforms, they are often implemented in the wrong order or without the institutions needed to make them work. Trade liberalization without enforcement fuels informality. Privatization without regulation entrenches rents. Price reforms without governance improvements raise costs without improving efficiency. Each measure may sound sensible in isolation; together, they fail to generate momentum. It is an attempt to install the software of a modern economy on institutional hardware that was never designed to run it.

Sustained growth requires a state capable of coordination and learning. Pakistan’s executive contains pockets of talent, but fragmentation, frequent transfers, and weak regulatory capacity undermine continuity. Heavy reliance on outsourced expertise has further eroded institutional capability, reducing incentives to build local skills and policy competence. As a result, the country’s limited absorption capacity, the ability to design, implement, and sustain reform, has become a binding constraint on economic governance.

Growth, in the end, is not just a policy challenge. It is a capability challenge. Without building that capability, even the right strategy will struggle to take root. Growth will not come from exhortation or hope. It will come from a different set of choices. Until Pakistan makes those choices, it will keep talking about growth and struggling to achieve it.

Copyright Business Recorder, 2026