One year ago, amid the maelstrom of Pakistan’s economic turmoil, General Syed Asim Munir, the Army Chief, delivered a speech that resonated deeply with the nation’s business community. Facing rampant inflation, a depreciating rupee, and a general sense of economic despair, his words offered a glimmer of hope. He urged resilience, acknowledged the challenges, but refused to succumb to pessimism. His message was a blend of pragmatism and optimism, painting a vision of recovery and assuring the nation that brighter days were ahead. General Munir’s call for domestic investment was particularly noteworthy. In a time when many were looking to foreign shores for economic salvation, he urged the business community to trust in Pakistan’s potential and invest within its borders. His message was clear: the nation’s economic revival would require a collective effort, and domestic investment was key. Fast forward a year, and the question lingers: Has General Munir’s vision materialized? Have the economic indicators shifted in the promised direction? While the journey has been arduous, there are indeed signs of progress. Inflation has been curbed, the rupee has stabilized, and there is a renewed sense of optimism in the business community.
The Numbers Donât Lie: Signs of Recovery Across the Board
The state of Pakistanâs economy in mid-2023 was dire. GDP growth was limping along at a paltry 0.29%, inflation had spiralled to an alarming 38%, and the rupee had plummeted to record lows. Fast forward to September 2024, and the picture is vastly different. GDP growth has risen to a respectable 2.38%, with further projections of 3.9% for 2025. Inflation has dropped dramatically to 9.6%, and the rupee has appreciated to Rs 278 against the dollar, suggesting a newfound confidence in the economy.
These improvements are not just statistical noise. The trade deficit has narrowed from $27.47 billion to $24.09 billion, driven by a rise in exportsâparticularly in agriculture, which jumped from $4.7 billion to $7.1 billion. Foreign direct investment, though still modest, has grown from $1.63 billion to $1.9 billion, reflecting growing interest in Pakistanâs potential. The KSE-100 index, a barometer of investor sentiment, has soared from 47,000 points to 82,000 points, reinforcing the sense that Pakistan is finally turning a corner.
Leadership: The Catalyst for Change?
Yet behind these figures, one must askâwhat, or who, has sparked this transformation? The COAS, often seen as a figure of stability in Pakistan, has assumed a more visible role in guiding the countryâs economic course. His two visits to Karachiâs business elite, in June 2023 and September 2024, were more than mere ceremonial gestures. They seem to have injected a much-needed dose of confidence and clarity at a time when both were in short supply.
Pakistanâs military has long played an influential role in its political and economic spheres, but this period suggests that the COASâs involvement has been more direct than usual. His engagement with the Special Investment Facilitation Council (SIFC), which seeks to unlock large-scale investments in critical sectors such as IT, agriculture, and minerals, underscores a broader strategy to revamp the countryâs economic foundations. The sharp drop in inflation, from a debilitating 38% to just 9.6%, alongside the appreciation of the rupee, point to a concerted effort to stabilise the economy, a task that would likely have floundered without strong, decisive leadership.
Economic Transformation: Whatâs Driving It?
Of course, the COASâs role is not the only factor driving Pakistanâs recovery, but it has been catalytic. The shrinking current account deficitâfrom -$2.55 billion to -$0.68 billionâillustrates improved external management. Remittances, a lifeline for Pakistanâs foreign exchange reserves, rose from $27.3 billion to $30.2 billion, while the Roshan Digital Account (RDA) saw inflows balloon from $1.96 billion to $8.58 billion, further boosting reserves. These improvements suggest a more structured, cohesive approach to managing the economy than was evident before.
The growth in exports, particularly in agriculture and IT, also deserves attention. Agricultural exports surged from $4.7 billion to $7.1 billion, while IT exports grew from $2.6 billion to $3.2 billion. These sectors are vital for a sustainable recovery, offering the potential for long-term growth if nurtured properly. One cannot ignore the importance of Pakistanâs trade ties with China, where exports increased from $2 billion to $2.7 billionâa relationship that, while controversial for some, has been beneficial in the short term.
The Militaryâs Economic Hand: A Double-Edged Sword?
There are, of course, critics who argue that military involvement in economic affairs is a slippery slope. The COASâs increased visibility and influence in shaping economic policy may raise concerns about overreach, particularly in a country where the balance between civilian and military power is often delicate. Yet, it would be naive to ignore the stabilizing role that the military has played in this period. Pakistanâs economy in 2023 was on the verge of collapse, and it is hard to imagine such a swift recovery without the intervention of a strong, stabilizing force.
The broader question is whether this recovery is sustainable. The improvements in GDP, inflation, and exports are undeniable, but they rest on a fragile foundation. The government must ensure that these gains are institutionalised and that future economic progress does not depend so heavily on the influence of one individual, no matter how capable.
Looking Ahead: Challenges Remain
Despite the impressive recovery, Pakistan still faces significant hurdles. Diversifying its export base remains crucial, as does fostering greater innovation in the agricultural and IT sectors. The jump in tax collectionâfrom Rs 7.1 trillion to Rs 9.3 trillionâshows promise, but much more needs to be done to strengthen public finances and reduce reliance on external financing. Additionally, the slight improvement in credit ratingsâfrom CCC/Caa3 to CCC+/Caa2âwhile encouraging, indicates that international creditors still view Pakistan with caution.
One also cannot overlook the geopolitical challenges. The reduction in smuggling to Afghanistan, for instance, is a positive development, but Pakistanâs economic future will be shaped by its ability to navigate complex regional dynamics, particularly in its relationships with China, India, and Afghanistan.
A Path Forward?
The economic indicators tell a compelling story of this transformation. Currency stabilization, improved investor confidence, and a significant reduction in inflation are tangible signs of Pakistan’s progress. These achievements are not merely statistical milestones; they represent a fundamental shift in the nation’s economic trajectory.The business community, which was once hesitant to invest domestically, is now embracing Pakistan’s economic potential with renewed enthusiasm. The COAS’s leadership has instilled a sense of confidence and trust, encouraging businesses to invest in the country’s future. If this momentum continues, Pakistan could very well emerge as a global economic powerhouse. The idea of Pakistan joining the G20, once a distant aspiration, now seems within reach. The COAS’s leadership has laid the groundwork for Pakistan to achieve economic significance on the world stage. By fostering a conducive environment for investment, promoting economic reforms, and strengthening international relations, Pakistan can position itself as a key player in the global economy.
