Page 71 - CMA Journal (May-June 2025)

S
S
S
S
S
S
S
S
S
S
S
S
S
S
u
s
s
c
c
u
s
S
S
S
s
s
s
e
o
o
n
o
o
o
n
n
n
n
n
n
n
o
e
e
e
e
e
e
c
c
c
c
c
c
c
o
o
o
o
o
F F F F F F F F F F F F F o c u s S e c t t t t t t t t t t t t t t t t t t t t t i i i i i i i o n
Focus Section
o
o
o
o
o
o
o
Caught in the Middle: Pakistan’s Growth
Trap & Its Cost to Business Sustainability
By: ICMA Research and Publications Department

Preamble Structural Challenges Behind Subdued Growth
This article covers Pakistan’s fragile economic trajectory This subdued growth is interwoven with real and
in comparison to its South Asian peers, highlighting the pressing problems as discussed below:
challenges of low GDP growth, volatile industrial output, • Fragile industrial base: Stagnant GDP dampens
weak business sentiment, and rising climate policy momentum in Large Scale Manufacturing (QIM) and
uncertainty. Amid robust growth across the region, GDP fuels volatile monthly industrial production,

forecasts for 2025 show Bhutan leading at 7%, followed impacting capacity utilization, investment decisions,
by India at 6.2%, Maldives at 4.5%, Nepal at 4%, and and job creation.
Bangladesh at 3.8%. In contrast, Pakistan’s modest 2.6%
growth not only signals economic underperformance • Lagging regional competitiveness: Pakistan’s lower
but also reflects deep structural fragilities that hinder GDP and slower progress in business sustainability
sustainable business development, as illustrated in the rankings—as compared to India, Bangladesh, and its
graph below: neighbors—underscore its lacking in innovation,
infrastructure, and regulatory effectiveness.
Figure 1: Real GDP Growth (%) for 2025
(Annual Percent Change) • Public sentiment and investor mood: A sluggish
economy continues to dampen business sentiment
7
7 in Pakistan, with the Business Confidence Index
6.2
6 declining to 56.9 in Q2 2025 from 58.1 in Q1 2025.
Although still above the 2018–2025 average of 50.32,
5 4.5
4 3.8 corporate pessimism is being amplified by persistent
4
structural issues such as import barriers and
2.6
3
currency instability. These factors are reinforcing low
2
business morale and leading to increasingly cautious
1 decision-making.
0
BHUTAN INDIA MALDIVES NEPAL BANGLADESH PAKISTAN • Climate policy uncertainty: With limited growth,
revenue-constrained governance reacts slowly to
Source: IMF: https://www.imf.org/external/datamapper/profile/PAK climate risks. This appears in fluctuating Climate
Policy Uncertainty Index trends, which deter
Against this backdrop, the article explores how these long-term planning and green investment.
structural challenges—spanning energy instability,
limited fiscal space, policy unpredictability, and Figure 2: Business Confidence
environmental risks—are undermining business
f
o
Su
Pa
ki
ey
st
an
rv
Survey of Pakistan
sustainability. It draws on real-time data covering GDP Survey of Pakistan
trends, industrial performance, investor sentiment, and
climate-related disruptions, while also showcasing how
leading Pakistani conglomerates such as Nishat, Fauji,
Hashoo, and Engro have managed to stay resilient
through diversification and integrated strategies. The
article concludes by outlining targeted policy
reforms—drawn from successful regional models in Sri
Lanka, Nepal, and the Maldives—that can help Pakistan
stabilize its industrial output, strengthen investor
confidence, and chart a path toward long-term,
export-driven growth.
Source: The Global Economy - https://www.theglobaleconomy.com/Pakistan/business_confidence_survey/
ICMA’s Chartered Management Accountant, May-June 2025 69