rom 2018 to 2023, Pakistan underwent a tumultuous period marked by significant political, economic and environmental challenges. The era began with controversial elections, with allegations of interference overshadowing the Pakistan Tehreek-i-Insaf‘s victory. This caused a legitimacy crisis. This so-called “same page” era, indicative of harmony between civilian leadership and the military, was disrupted by a significant standoff over intelligence appointments, culminating in the prime minister’s ouster through a no-confidence vote.

Amid political unrest, Pakistan grappled with severe repercussions of the Covid-19 pandemic, devastating currency devaluation and extremely low levels of foreign exchange reserves. An unprecedented flooding disaster added to the nation’s woes, with damages estimated at $25 billion. The looming threat of a sovereign default mirrored the nation’s precarious financial state. A potential lifeline emerged finally with a $3 billion Stand-By Arrangement with the International Monetary Fund. The period also saw the arrest of Imran Khan, sparking nationwide riots and ensuing fragmentation in his once-dominant party.

As the political helm shifted from the PTI to the Pakistan Democratic Movement, the ripples were noticed in the corridors of industry and commerce. Navigating through periods of political polarisation and shifting economic policies, these sectors stood as indicators of the country’s persistent structural socioeconomic problems.

According to the State Bank data, the Production Index of Selected Large-scale Manufacturing saw a commendable growth rate of 9.64 percent during the PTI regime, despite the global challenges posed by the Covid-19 pandemic. This resilience may be attributed to strategic decisions, stimulus packages and international collaborations initiated by the government. However, the period was also marked by considerable volatility, with a standard deviation of 15.20, indicating potential economic instability. This turbulence could have been influenced by the pandemic, trade disruptions or domestic issues. The subsequent PDM rule, although brief, displayed relative stability in the manufacturing sector, with an average production index at 113.86 and reduced volatility of 7.73, the sector managed to hold steady even in the wake of the devastating floods in 2022, suggesting effective mitigation measures.

Placing Pakistan’s industrial policy in the broader South Asian context reveals a need for introspection and reform. Historically, Pakistan’s industrial output and contribution to GDP have trailed behind its neighbours, Bangladesh and India. While the data from PTI’s era showed growth, the overall industrial contribution to Pakistan’s GDP remained stagnant around the 19-20 percent mark. The experience of both PTI’s and PDM‘s tenures highlights the significance of a stable and proactive industrial policy. To match the progress trajectories of its South Asian counterparts, Pakistan needs a more comprehensive and forward-looking approach to harness its demographic and resource potential.

As the political helm shifted from the PTI to the PDM, the ripple effects were deeply felt in the corridors of industry and commerce. Navigating through periods of political polarisation and shifting economic policies, these sectors stood as indicators of the country’s persistent structural socioeconomic problems.

Pakistan grappled with a widening trade deficit during the PTI regime, evident from the consistently negative cumulative balance of trade. Despite efforts to stabilise and a recovery in foreign currency deposits around 2020, the country’s trade imbalance persisted. The government’s debt also rose, albeit slower than the previous tenure of the Pakistan Muslim League-Nawaz (PML-N). The subsequent PDM rule showed a steadier economic picture. The trade balance, while still in deficit, did not expand further; foreign currency reserves stayed consistent and the central government debt was stable.

However, viewed against regional peers India and Bangladesh, Pakistan’s vulnerabilities in trade policies become conspicuous. The nation’s persistent and deepening current account deficits during 2013-2022, especially during PTI’s era, overshadow those of its neighbours. Additionally, the low reserves during both the PTI and PDM periods highlight a diminished capacity to manage imports and external shocks. Pakistan’s trade strategies have not effectively boosted export competitiveness or curtailed import dependency.

Pakistan’s industrial and trade challenges in recent years are deeply rooted in its long-standing structural issues. The nation’s turbulent political landscape, characterised by frequent transitions between military and civilian rule, has impeded the growth of stable democratic institutions essential for consistent policy-making. This instability is compounded by widespread corruption, poor governance and a glaring absence of basic public services. Coupled with low human development indicators, archaic feudal structures and inadequate public spending on sectors like health and education, the country struggles to cultivate a workforce equipped for industrial advancement.

The economic front has its own set of challenges: a languishing industrial sector, power shortages, bureaucratic obstacles and escalating security concerns have stymied a robust export foundation. A ballooning fiscal deficit, constricted tax base and heavy reliance on external financial assistance have further constrained economic policy choices. The overarching security concerns, recurrent interventions in political affairs and the establishment’s influence over the judiciary have strained resources and eroded democratic consolidation and the rule of law.

Between 2018 and 2023, Pakistan’s political and economic landscapes experienced significant shifts. The PTI’s tenure saw industrial growth amidst political uncertainties but was also marked by trade imbalances. The PDM era, though brief, hinted at economic stability, yet Pakistan’s position relative to regional peers like India and Bangladesh signals the need for deeper introspection. Persistent political disruptions, coupled with longstanding structural economic challenges, have impeded progress. The lessons from both PTI’s and PDM’s reigns underscore the importance of political stability and refined economic policies. Moving forward, Pakistan must prioritise consistent governance and economic reforms, drawing inspiration from successful regional practices, to harness its vast potential and achieve sustainable growth.

The writer is an associate professor in the Department of Economics at COMSATS University Islamabad, Lahore Campus