Clock ticking for Pakistan’s economy? State bank chief issues stark warning

New Delhi: A warning by State Bank of Pakistan Governor Jameel Ahmad that the country’s economic growth model is “unsustainable” for a population of 250 million has underscored the deepening structural crisis facing Pakistan, a report said on Saturday.

According to a report by European Times, the governor’s remarks come as Pakistan struggles with rising poverty, record unemployment and a prolonged phase of economic stabilisation that has squeezed both households and businesses.

“Pakistan may have been living on borrowed time. Now, its chief banker is saying the clock has all but run out,” the report said.

The report noted that Pakistan has remained trapped in repeated cycles of economic “corrections”, each marked by heavy taxation, steep energy tariffs and sharp spending cuts that disproportionately affect ordinary citizens.

“With each round of stabilisation, the cushion for households and industries shrinks, while the structural defects that make stabilisation necessary remain untouched,” it added.

Describing the slowdown as a structural decline rather than a temporary setback, the report pointed to decades of stagnation. Economic growth has steadily weakened, slipping from an average of around 3.9 per cent over the past 30 years to 3.4 per cent in the last five years.

It argued that Pakistan’s existing economic framework — dependent on consumption-driven spurts, cyclical borrowing and stopgap stabilisation measures — is incapable of meeting the needs of its 250 million citizens.

The European media outlet said the pattern repeats itself year after year. “The country runs out of reserves, inflation spirals, the currency slumps, and the IMF is summoned for another rescue package. Stabilisation measures follow, growth collapses, poverty spikes, and once the crisis abates, the cycle begins again,” the report said.

Unemployment has climbed to a 21-year high of 7.1 per cent, leaving millions without jobs in an economy that is struggling to generate opportunities. Citing World Bank data, the report added that poverty has surged to 44.7 per cent in the country.