PBC highlights key economic risks and opportunities for 2025

KARACHI: The Pakistan Business Council (PBC) on Thursday highlighted critical risks and growth opportunities for the economy in 2025, stressing the need for structural reforms, fiscal discipline and strategic leadership to build on the economic stability achieved in 2024.

In a statement shared on X, the PBC, a leading corporate advocacy platform, pointed out five key challenges facing the economy, while also offering insights into areas of potential growth.The PBC warned that Pakistan has previously experienced short-lived economic stability during the early years of International Monetary Fund (IMF) programmes, only to have it undone by monetary and fiscal easing. This, it said, fuelled import-based demand and balance-of-payments crises. “Those in government and business yearning for immediate growth would be well advised to curb their appetite,” it stated.

The council’s second concern centred on delayed reforms, including privatisation and government restructuring. It called for decisive leadership to resolve internal conflicts within the coalition government and present a unified front.

Failure to meet tax revenue targets emerged as another major risk, with the PBC criticising inefficiencies within the Federal Board of Revenue (FBR). “Of the three areas of FBR’s transformation -- people, process and technology -- the hardest to deal with is people and their attitude to taxpayers,” it noted.

Energy costs, availability and reliability were identified as the fourth challenge. The council said that without addressing these issues, manufacturing would remain uncompetitive and job creation would stagnate.

Finally, the PBC highlighted a growing trust deficit between the business community and the government. It pointed to the extrajudicial treatment of independent power producers (IPPs) as a key example of actions that discourage investment and hinder public-private partnerships.

Despite these challenges, the PBC underscored several opportunities to boost economic growth. It noted that many sectors, including cement, agriculture and IT, possess significant unutilised capacity that could generate additional employment and output without requiring new capital investment or imports.

Agriculture was singled out as a sector with immense potential for growth, exports and rural upliftment. “Agriculture offers the largest potential for growth, reduced reliance on imports, food security and uplifting the rural economy,” the PBC said.

The council also called for smarter foreign direct investment (FDI) strategies, focusing on export-oriented projects rather than indiscriminate capital inflows. It advised renegotiating existing trade agreements to secure better market access instead of pursuing new ones.

The PBC said that right sizing of the federal government and sharing resources and responsibilities for development and social safety net with the provinces, coupled with lower cost of borrowing will keep the fiscal account and inflation in check.

It further recommended taxing agriculture and property, along with empowering local governments to directly improve people’s lives. “Tax on agriculture and property, if accompanied by empowerment of local bodies, can have a meaningful impact on people’s lives,” the council added.

The PBC concluded its statement with a call for clear and decisive leadership to build on the existing economic stability. “There is real potential to build on the stability,” it said. “This will require unambiguous leadership, strong commitment and room for fresh ideas and people. Repeating past practices will yield no different results.”