6-7% growth needed to avoid economic crisis

Business leaders warn 3.7% GDP insufficient for 400m population by 2040

KARACHI:

Pakistan will need sustained real economic growth of 6% to 7% annually to cope with a rapidly expanding population and create enough jobs, infrastructure and public services, business leaders said on Monday.

They warned that the current growth rate is insufficient to meet the country's future needs.

The country's population could approach 400 million by 2040, they said, warning that demographic expansion without a corresponding increase in economic output could intensify unemployment, poverty and pressure on education, healthcare, housing and other basic services. "The country needed to shift from short-term economic management towards a long-term growth strategy capable of creating productive employment for millions of young people entering the workforce," said Pakistan Industrial and Traders Associations Front (PIAF) founder Mian Shafqat Ali.

Pakistan could not afford to continue with low economic growth while its population continued to increase, he added.

According to Ali, Pakistan's economy must grow by at least 6% to 7% annually in real terms to provide jobs, education, healthcare, housing and other basic facilities to a rapidly growing population.

"A growth rate of around 3% to 4% may provide temporary stability, but it is not enough to substantially improve living standards or create sufficient employment," he said. According to World Bank data, Pakistan's GDP reached around $407.3 billion in 2025, while per capita income stood at approximately $1,596 and economic growth at 3.7%. The business community said that if the population reached 400 million by 2040, Pakistan would need an economy of roughly $640 billion merely to maintain the existing per capita income level. Much higher economic output would be required if the country wanted to significantly improve living standards.

They said an economy of around $2 trillion would be required to achieve a per capita income of $5,000 for a population of 400 million, while reaching $6,000 per capita would require an economy of approximately $2.4 trillion.

Syed Mahmood Ghaznavi, another office bearer, said the demographic challenge should be treated as an economic planning issue rather than merely a population-control issue, as a large young population could become a major source of growth if Pakistan created the right conditions for investment, industrialisation and employment.

"We have to turn our young population into an economic asset by investing in skills, education and productive sectors," he said.

"This requires a clear 2040 economic roadmap with targets for exports, industrial production, investment, tax collection and productivity. If we fail to create opportunities for our young people, the demographic dividend can instead become a serious economic burden."

The business leaders called for a major expansion in export-oriented industries, arguing that Pakistan would need substantially higher foreign exchange earnings to support the larger economy without repeatedly facing external financing pressures. They also stressed the need to attract private investment by reducing the cost of doing business, improving the energy supply, simplifying regulations and providing policy consistency.

Higher productivity, they said, was equally important because simply expanding the size of the workforce would not generate sustainable increases in incomes.