Pakistan economic challenges deepen despite avoiding default as experts warn that high taxation, expensive energy, rising production costs, and policy uncertainty are pushing industries toward closure and forcing multinational companies to exit the country.
These concerns were raised by economists and business community representatives during an “Express Forum” discussion on the country’s economic situation, where participants highlighted structural weaknesses that continue to undermine growth and investment despite Pakistan narrowly avoiding a sovereign default.
The session was moderated by Ahsan Kamrey and brought together leading voices from the business and economic sectors, who emphasized that short-term stability has not translated into sustainable economic recovery.
High Taxes and Energy Costs Strain Industry
Regional Chairman of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Zaki Ijaz, stated that Pakistan’s industrial production costs have reached unsustainable levels. He pointed out that electricity prices for industry in Pakistan stand at around 12.5 cents per unit, compared to 8 cents in India and Vietnam and 6 cents in Sri Lanka.
According to him, such high energy costs have severely damaged the competitiveness of Pakistani industry, leading to factory closures and declining output. He warned that without urgent corrective measures, the country risks long-term deindustrialization.
Tax Burden Far Above Global Norms
Forum participants also expressed concern over Pakistan’s exceptionally high tax rates. Economists noted that while the maximum tax rate globally averages around 35 percent, Pakistan’s effective tax burden ranges between 55 and 65 percent, discouraging investment and formal business activity.
Citing World Economic Forum assessments, speakers warned of a growing risk of unemployment, as excessive taxation and shrinking industrial activity reduce job creation and accelerate capital flight.
Policy Uncertainty and Wheat Market Issues
Former FPCCI Regional Chairman Dr. Muhammad Arshad criticized the government’s decision to deregulate wheat prices two years ago, stating that the policy failed to deliver positive outcomes. He said the government has now decided to auction 2.5 million tons of wheat, reflecting the need for policy correction.
He emphasized that wheat should be fully market-driven, with both import and export allowed to stabilize prices and improve supply chain efficiency. He also stressed the need to bring the interest rate down to single digits to revive investment and economic activity.
Structural Economic Weaknesses Persist
Economist Professor Dr. Mubashir Munawar Khan highlighted deeper structural problems within Pakistan’s economic management framework. He argued that the country’s bureaucracy lacks sufficient training and capacity in economic planning and policy implementation.
According to him, economic decision-making should be shifted away from administrative control and placed in the hands of qualified economic experts to ensure evidence-based policymaking.
Call for Reforms and Cost Reduction
Participants agreed that reducing energy tariffs, simplifying regulations, and rationalizing taxation are critical for economic revival. They stressed that without structural reforms, Pakistan’s economy will continue to face stagnation despite temporary financial relief from international lenders.
Experts warned that failure to address these challenges could result in prolonged economic stress, declining foreign investment, and increased unemployment in the coming years.
The forum concluded with a consensus that while Pakistan has avoided immediate default, the absence of comprehensive reforms continues to pose serious risks to long-term economic stability.