The government narrative on the state of the economy, not surprisingly, remains extremely upbeat though there are periodic glimpses of a deep-seated concern, given the palpable general public discontent over this claim.
The objective, no doubt, is to alter market perceptions that shape consumer attitudes which, in turn, may raise consumption levels that can kick-start productivity and raise employment opportunities.
The government insists that the rise in the Gross Domestic Product (GDP) growth rate is on an upward trajectory – a claim substantiated by the 3.09 percent GDP growth for 2024-25 and 3.71 percent estimated in the first quarter (July-September) of the current fiscal year announced by the national accounts committee (NAC) on 30 December 2025 (uploaded on the Pakistan Bureau of Statistics PBS website).
The main driver of this growth, the government data collection agencies point out, is higher industrial productivity reflected by rising large scale manufacturing (LSM) sector growth estimated at 5.02 percent July-November 2025 in the Finance Division’s December update and outlook compared to negative 0.62 percent in the same period last year with the very low base accounting for the bulk of the spurt in the growth calculation in the current year. The update for July-November was estimated at 6.01 percent by the PBS.
However, the crescendo of complaints by the LSM private sector has raised legitimate concerns about the accuracy of the data that include: (i) electricity cross subsidy paid for by industry raises input costs making our exports uncompetitive – a claim supported by a decline in exports – and incentivises smuggling across hundreds of miles of our porous borders; (ii) the proactive audit of industrial units – touted as enforcement – is limited to sales tax and particularly to sugar, cement and now fertilizer sub-sectors which is an indirect tax passed onto the consumers whose incidence on the poor is greater than on the rich; (iii) delayed refunds though the Islamabad High Court recently slapped a one lakh rupee fine on Commissioner Inland Revenue in his personal capacity that may eventually be paid by the Federal Board of Revenue (FBR) as a Commissioner must get the Board’s approval for any submissions in court; (iv) a 10.5 percent discount rate which, though more than halved from the 22 percent in May 2024, is still more than double the regional average; and (v) the freezing of accounts as penalty for non-payment of due taxes as determined by the FBR prior to the filing of appeals.
All Pakistan Textile Mills Association claims that 150 units have closed down during the past year and a half as a consequence of these flawed decisions while Pakistan Readymade Garments Manufacturers and Exporters Association revealed that over 100 spinning units have shut down leading to shortages of yarn and fabric with most of the large scale units that once operated two shifts forced to operate a single shift.
Pakistan Association of Large Steel Producers is now operating at 30 to 50 percent capacity producing 3.8 million tons per year against the installed capacity of 9 million tons. And cement dispatches fell by 3.47 percent in November 2025 year-on-year to 4.14 million tons though total dispatches rose by 11.54 percent during the first five months of the current year.
Data of the number of closures accounts for Pakistan’s industrial sector’s challenge to government claim of a 6.01 percent LSM growth July-November 2025.
The Finance Minister while addressing the Pakistan Policy Dialogue held on Wednesday this week past acknowledged the closure of multinationals but added that: (i) there is a need for a new business model rather than adhering to a 90-year-old model – he needs reminding that Pakistan has been a sovereign country for only 78.5 years, besides it is doubtful that any private sector company set up even a century ago would have followed a business model that does not aim to maximise profits; (ii) there have been 20 new foreign investors during the past 18 months – a claim not backed by government data given that foreign direct investment July-June 2024-25 was USD 2,489.7 million, an amount that compares rather unfavourably with India’s USD 81 billion, with USD 1,242.4 million inflows during July-November 2024 against USD 927.4 million July-November 2025 – a decline of 25 percent; portfolio investment declined from positive USD 148.7 million July-November 2024 to negative USD 613 million July-November 2025.
Another set of statistics released by the PBS is challenging the government claim that the economy is generating higher employment.
The recently released Labour Force Survey (LFS) 2024-25 indicated the following disturbing trends when compared with the LFS 2020-21: (i) Pakistan’s unemployment rate has risen to 7.09 percent to nearly 8 percent up from 6.3 percent in LFS 2020-21 across all age groups; (ii) this increase was observed both in case of males (5.5 percent in LFS 2020-21 to 5.9 in the 2024-25 LFS) and females (8.9 percent to 9.7 percent); (iii) area- wise disaggregated figures indicate that unemployment rate is up both in urban (7.3 percent in LFS 2020-21 to 8.0 percent in 2024-25) and in rural areas (5.8 percent to 6.3 percent); and (iv) unemployment rate is the highest in Khyber Pakhtunkhwa at 9.63 percent up from 8.8 percent in LFS 2020-21 (with crude participation rate at 29.22 percent), followed by Punjab at 7.27 percent (a rise from LFS 2020-21 of 6.8 percent) with a crude participation rate of 35.66 percent and Balochistan at 5.54 percent - a rise when compared with LFS 2020-21 of 4.3 percent with a crude participation rate of 27.86 percent. Sindh performed the best, even though it too suffered from a rise in unemployment – 5.28 percent in LFS 2024-25 against 3.9 percent in LFS 2020-21 and a crude participation rate of 31.66 percent.
The share of formal sector in employment is a mere 27.5 percent in 2024-25 LFS, a disturbing claim, against 27.6 percent in LFS 2020-21 (males accounting for 26.6 percent and females 73.4 percent females in LFS 2020-21 against 27.3 percent males and 72.5 percent females in LFS 2024-25); the informal sector accounted for 72.5 percent in LFS 2024-25 against 72.4 percent in LFS 2020-21 (males accounting for 34.5 percent in LFS 2024-25 against 26.6 percent in LFS 2020-21 and women accounting for 65.5 percent in the two LFS). The minimum wage is not enforceable in the informal sector.
The wages of the informal sector are at best a projection which may account for PBS to note that “notwithstanding complete observance of the requisite codes to ensure reliability of data coefficient variations and confidence intervals (were) computed in the backdrop of 5 percent margin of error,” a rather high margin which critics may argue challenges claims of data integrity. This is strengthened by the wage data revealed which claims that the highest wages are in Balochistan at 27,659 rupees per month, followed by Sindh at 24,664 rupees, KPK at 24.028 and the lowest in Punjab at 23,367 rupees.
LFS 2020-21 gives the average all Pakistan wage at 24,028 rupees per month, while the LFS 2024-25 notes a significant rise to 39042 rupees per month – a rise of 62 percent. However, this is for the formal sector – 34964 to 54038 rupees per month – a rise of 54.5 percent.
The bulk of this raise is accounted for by the 7 percent of civilian and military personnel whose salaries are paid by the taxpayers’ and who witnessed a massive increase, well above the rate of inflation, in every fiscal year.
The informal sector wage rose from 17,529 rupees per month in LFS 2020-21 to 30834 rupees per month – an estimate at best. However, these are estimates at best and are subject to considerable survey and surveyed bias.
The purchasing power of each rupee earned each year is best reflected by the rate of inflation: in 2020-21 inflation was estimated at a low of 8.9 percent however next year it rose to a high of 29.18 percent and in 2023-24 it was 23.41 percent.
The average inflation in 2024-25 was a low of 4.49 percent. In this context it is relevant to note that the ongoing International Monetary Fund programme noted “important shortcomings in the source data” and extended a technical assistance on government finance statistics as well as a new Producer Price Index.
To conclude, the private LSM sector, the rise in unemployment and the rise in the average national wage between 2020-21 and 2024-25 challenges the government industrial growth data.
Copyright Business Recorder, 2026
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