‘Ticking time bomb’: agriculture, industry, and Pakistan’s growing population

Pakistan’s population is increasing by around 6 million people every year, at a rate of 2.55%, which is one of the highest population growth rates in Asia, surpassed only by a few countries in Africa. At a growth rate of 2.7%, Pakistan’s gross domestic product (GDP) growth effectively translates into no real per-capita growth. On the employment front, the situation is even more alarming.

According to World Bank data from June 2025, over 107.95 million or 45% Pakistanis live below the poverty line. The unemployment rate in the country currently stands at around 7%. With around 50% of the population qualifying for labour force participation, and an annual population increase of 6 million, Pakistan must create at least 3 million new jobs every year just to stay afloat.

The bulk of Pakistan’s workforce is absorbed by agriculture and manufacturing, the only two sectors capable of employing people at this scale. Unfortunately, both the sectors are suffering immensely.

The government continues to celebrate narrowly avoiding default while turning a blind eye to the deep structural problems facing agriculture and manufacturing.

According to official figures, agricultural growth in 2024-25 was around 0.56%, while the crop sub-sector witnessed negative growth of 6.82%. Large-Scale Manufacturing (LSM) contracted by 1.5% during July–March FY2025.

Pakistan’s large-scale manufacturing rebounds with 4.08% growth in Q1 FY2025-26

This not only worsens unemployment, but also undermines exports, the balance of payments, and fiscal revenue, especially given that the government’s primary balance this year is based on aggressive LSM growth assumptions. All of this will result in massive unemployment and a law-and-order crisis. It is a time bomb waiting to explode.

LSM and agriculture have been crippled by ad hoc policies and the absence of a coherent long-term strategy. High energy costs, unbearably high taxation, elevated interest rates, and rising labour costs have made Pakistani exports uncompetitive in global markets, which are already under pressure due to US tariffs and global volatility.

The result has been falling exports and capital flight to more competitive regions. If this continues, Pakistan will once again face severe balance-of-payments issues and be on the verge of bankruptcy before we know it.

The government continues to celebrate narrowly avoiding default while turning a blind eye to the deep structural problems facing agriculture and manufacturing. If these issues are not addressed on an emergency basis, Pakistan will move toward an irreversible economic and social crisis.

Pakistan 5th most populous country with population of 241.49m: report

Today, Pakistan has some of the highest energy costs, tax burdens, interest rates, and labour costs among its export competitors. Expecting export growth under such conditions is unrealistic. Though the government frequently uses the term “export-led growth“, it has taken steps that directly contradict this, resulting in a shrinking industrial base and an increase in import dependency, pushing the balance of payments to an unsustainable level.

For Pakistan, reviving agriculture and boosting exports, particularly value added textiles and clothing, is a low-hanging fruit. A growing population can only be absorbed meaningfully in these sectors.

Additionally, government intervention in food crops, often driven by vested interests, has resulted in reduced sowing. From wheat and rice to cotton and sugarcane, the government has not been able to develop a policy that repairs the deep trust deficit between farmers and the state. This has led to reduced cultivation. Simultaneously, high fertiliser prices have forced farmers to either cut usage or abandon fertilisers entirely, leading to declining yield and quality.

For Pakistan, reviving agriculture and boosting exports, particularly value added textiles and clothing, is a low-hanging fruit. A growing population can only be absorbed meaningfully in these sectors. Many countries have successfully taken this route to create employment and stabilise their economies.

The government is aware of the urgent measures required. Failure to act will bring consequences far beyond commerce and economics, pushing the country to a point of no return.

The article does not necessarily reflect the opinion of Business Recorder or its owners.