It has been 35 years since The News International appeared simultaneously from Lahore, Islamabad and Karachi. It was because of its innovative layout and focus on young readers, it made inroads among youngsters who to this day remain addicted to that format.
When The News was launched, Pakistan’s economy was in growth mode. In the last 35 years, Pakistan’s economy has moved in cycles of expansion and crisis, repeatedly showing resilience but rarely achieving structural transformation. From a semi-protected economy in the early 1990s to a consumption-driven, debt-dependent system today, the country’s economic journey reflects a consistent pattern: short bursts of growth followed by external imbalances and stabilisation programmes.
In 1991, Pakistan stood at an economic crossroads. GDP was roughly $20-25 billion in nominal terms, with growth exceeding 5 per cent. Exports hovered around $6 billion, dominated by textiles and cotton-based products, while imports slightly exceeded exports, creating a manageable trade gap.
The economy was still heavily influenced by the state. Public sector enterprises controlled banking, energy, and heavy industry. Agriculture remained the backbone, employing a large share of the population, while manufacturing was largely protected through tariffs and licensing regimes.
Interest rates remained high - around 12-14 per cent - reflecting inflationary pressures and fiscal deficits. The withdrawal of US aid under the Pressler Amendment exposed Pakistan’s vulnerability to external financing shocks.
This was also the beginning of privatisation and liberalisation under Nawaz Sharif, but reforms were uneven and frequently interrupted by political instability. By 1996, Pakistan’s GDP had expanded significantly, and growth touched nearly 6-7 per cent. Exports rose to approximately $8-9 billion, but imports surged faster, widening the trade deficit.
Privatisation gained momentum, particularly in banking and industry. However, fiscal discipline remained weak, and the tax base did not expand proportionately. Political instability - alternating governments and short tenures - undermined policy continuity.
The seeds of future crises were already visible in the form of rising external deficits, weak institutional reforms, and dependence on short-term borrowing. Pakistan was growing - but not strengthening.
The late 1990s reversed earlier gains. Nuclear tests in 1998 triggered sanctions, foreign exchange reserves plummeted, and growth slowed to below 4 per cent by 2001. In 2001, sanctions, stagnation, and reset. Exports stagnated at around $9 billion, while imports compressed due to low demand and limited financing. Interest rates remained high, and the economy entered a stabilisation phase.
The military takeover in 1999 brought a technocratic approach to economic management. By 2001, Pakistan was on the brink of default - but events would soon change its trajectory dramatically. The period from 2001-2011 was an era of boom, consumption, and crisis.
The post-9/11 period marked one of the most significant turning points in Pakistan’s economic history. Pakistan received substantial external inflows accompanied by debt rescheduling, increased foreign aid, and a surge in remittances.
Between 2002 and 2007, GDP growth averaged 6-7 per cent. Banking reforms deepened financial intermediation, consumer financing expanded rapidly, and a new middle class began to emerge. Exports grew to around $20-25 billion by the end of the decade, but the structure remained unchanged - still dominated by low-value textiles. Imports surged even faster, driven by oil, machinery, and consumer goods.
This period saw the expansion of telecom, banking, and construction, rapid urban consumption, and rising private sector credit. However, the growth model was fragile. It relied heavily on external inflows rather than productivity gains.
The global financial crisis of 2008 exposed these weaknesses. Growth collapsed, inflation surged above 20 per cent, and Pakistan entered another IMF programme. Energy shortages and governance issues further constrained growth. By 2011, Pakistan had avoided default but was once again trapped in stabilisation.s
2011-2021: Infrastructure push and external imbalances
The next decade was shaped by infrastructure investment and consumption-led growth. The launch of the China-Pakistan Economic Corridor (CPEC) brought large-scale investment in energy and transport. Power shortages eased, and GDP growth recovered to around 5-6 per cent by 2017-18. Exports, however, remained stagnant at around $22-25 billion for much of the decade. Imports surged, crossing $50 billion at their peak, driven by machinery, fuel, and consumer demand.
Key features of this period included the expansion of road networks and energy capacity, rising urbanisation, and growth in retail and services sectors. Yet structural weaknesses persisted. The export base remained narrow and the tax-to-GDP ratio remained very low. There was increasing reliance on external borrowing. By 2018, Pakistan faced another balance-of-payments crisis and returned to the IMF.
The COVID-19 pandemic disrupted the economy briefly, but recovery was relatively quick due to remittance inflows and policy support. By 2021, GDP growth rebounded, but underlying vulnerabilities remained unresolved.
The last five years (2022-2026) saw crisis after crisis accompanied by high inflation and extremely fragile stabilisation. The most recent phase has been one of severe economic stress. In 2022, political instability coincided with global shocks rising commodity prices and tightening financial conditions. The rupee depreciated sharply, inflation surged above 25 per cent, and interest rates climbed to historically high levels. By 2023, inflation crossed 30 per cent, policy rates exceeded 20 per cent, and growth slowed to near zero. Imports were compressed drastically to manage the external account, while exports showed only marginal improvement.
The economy entered a period of forced stabilisation, characterised by tight monetary policy, fiscal austerity, and IMF conditionality.
By 2024-2025, some stability returned. Inflation began to ease, external accounts improved due to import compression, while remittances remained a key support. However, growth remained subdued, and industrial activity struggled due to high costs of capital and energy.
By 2026, Pakistan stands at yet another familiar point. The economy has stabilised but not transformed. It is in recovery mode but not accelerating. Across 35 years, a clear pattern emerges. Growth is driven by external inflows (aid, remittances, borrowing).
The pattern in the last 35 years has remained the same, in which the country witnessed growth cycles without reform. The current situation is that imports are rising along with an increase in consumption. We are experiencing widening external deficits. Cycles of crisis and stabilisation. This trend was repeated in the late 1990s, late 2000s, late 2010s, and early 2020s.
What did not change in the last 35 years, despite significant shifts in policy and global conditions, is that several structural issues remain constant. These include export concentration in low-value textiles, weak tax collection and documentation, limited industrial diversification, and policy inconsistency due to political instability. Even during high-growth periods, Pakistan has struggled to move up the value chain or build globally competitive industries beyond textiles.
Pakistan’s economic history is not one of failure it is one of missed transformation. The country has demonstrated entrepreneurial capacity, strong domestic markets, and resilience in crisis. What Pakistan has lacked over the past three decades is continuity in reform and a consistent strategy to expand exports, broaden the tax base, and improve productivity.
In short, we can say that from 1991 to 2026, Pakistan’s economy has grown in size but not in strength. GDP has expanded many times over, but the underlying structure remains fragile. The central lesson of the past 35 years is clear: stability without structural reforms only postpones the next crisis. Unless Pakistan breaks this cycle, the future may continue to resemble the past periods of growth interrupted by inevitable corrections.
The writer is a senior economic reporter based in Lahore
