he government of Pakistan has made significant improvements in stabilising key economic indicators, including lower interest rates, lower inflation and improved foreign exchange reserves. On paper, these achievements reflect a semblance of economic recovery and policy effectiveness.

However, the ground reality tells a different story. The public remains largely untouched by the macroeconomic improvements. The national economy continues to navigate a narrow corridor between structural challenges and pockets of sectoral resilience, revealing a troubling disconnect between policy success and public benefit.

The second quarter of the current fiscal year (FY2024-25) saw modest GDP growth of 1.73 percent, driven primarily by services (2.57 percent) and agriculture (1.10 percent). The industrial sector contracted by 0.18 percent, exposing deep-rooted vulnerability in the country’s productive capacity and job opportunities. This uneven recovery, coupled with persistent governance failures, raises critical questions about who actually benefits from these economic adjustments/ improvements.

The services sector emerged as a rare bright spot, with information and communication (8.45 percent), finance and insurance (10.21 percent) and public administration (9.10 percent) showing robust growth. However, the expansion masked a severe contraction in large-scale manufacturing (-2.86 percent) and key crops such as cotton (-30.7 percent), maize (-15.4 percent) and sugarcane (-2.3 percent), which collectively declined by 5.38 percent. These figures highlight an alarming trend.

The technology-driven urban centre services thrive but the backbone of Pakistan’s economy - agriculture and industry - is deteriorating. Decline in imports and manufacturing output also dragged down wholesale and retail trade by 1.13 percent, further squeezing small businesses and informal workers. Livestock, growing by 6.51 percent, provided some relief, but without structural reforms in energy, agriculture and industrial policy, this fragile growth remains vulnerable to both domestic inefficiencies and external shocks.

Against this backdrop, the recently released Consumer Price Index inflation report for March 2025 revealed a month-on-month inflation rate of 0.89 percent, with urban and rural areas experiencing increases of 0.78 percent and 1.05 percent, respectively. These figures suggest relative stability, but a deeper analysis shows concerning trends.

The food and non-alcoholic beverages category, which carries the highest weight in the CPI basket at 34.58 percent, saw a sharp rise of 1.87 percent nationwide, with perishable food items surging by 7.53 percent. Essentials like tomatoes, fresh fruits and eggs recorded double-digit spikes, highlighting the volatility that plagues Pakistan’s food supply chains. These fluctuations are not accidental but symptomatic of systemic failures: poor agricultural planning, inadequate storage facilities and most critically, unchecked profiteering enabled by weak governance.

The widening gap between wholesale and retail prices, now an alarming 133 percent for some commodities, is a damning indictment of provincial administrations. In Quetta, potatoes are sold at 133 percent above wholesale prices; in Karachi, onions carry a 106 percent markup. These disparities are not mere market inefficiencies but evidence of regulatory paralysis.

Shockingly, chief secretaries in the Punjab and Balochistan logged into price monitoring dashboards just three and zero times, respectively, in a month, compared to Khyber-Pakhtunkhwa’s 88 logins. This negligence has allowed middlemen to exploit consumers with impunity, turning basic food items into luxury goods for millions.

The National Price Monitoring Committee’s findings reveal a governance vacuum where provincial authorities, despite constitutional mandates under the 18th Constitutional Amendment, have abdicated their responsibility to protect citizens from price manipulation.

Pakistan’s economic contradictions stem from a deep governance crisis. The federal government’s reliance on provincial administrations to enforce price control has failed due to incompetence. 

The year-on-year CPI analysis further compounds these concerns. While national inflation increased by a modest 0.69 percent compared to March 2024, food prices plummeted by 5.12 percent, driven by a 30.18 percent collapse in perishable items. At first glance, this decline might seem positive, but it reflects extreme volatility rather than stability—farmers suffer from depressed prices at harvest, only for consumers to face shortages and hyper-inflated costs a few months later.

Meanwhile, non-food categories like clothing (13.53 percent), health (13.80 percent) and education (11.94 percent) saw double-digit hikes, eroding household purchasing power. Rural areas experienced significant food price fluctuations and a 25.88 percent increase in education costs, despite a low inflation rate of 0.02 percent, worsening access to basic services.

The average inflation rate for July-March 2024-25 stands at 5.25 percent, with urban and rural areas recording 6.35 percent and 3.68 percent, respectively. These aggregates conceal the lived reality of families budgeting amid erratic price surges. 15.04 percent rise in clothing costs and 14.53 percent increase in health expenses strain already fragile household finances.

The planning minister’s recent directives—promoting cold storage, vegetable processing and edible oil production—are theoretically sound but lack urgency in implementation. Without immediate crackdowns on hoarding and price-fixing, these long-term measures will do little to alleviate present suffering.

Pakistan’s economic contradictions stem from a deep governance crisis. The federal government’s reliance on provincial administrations to enforce price controls has failed due to incompetence and indifference. The result is an economy where policy gains are captured by elites and not shared by the masses.

The recent GDP growth, though welcome, is neither inclusive nor sustainable without addressing structural bottlenecks: energy shortages, agricultural stagnation and industrial decline. The service-led recovery, while impressive, cannot compensate for the erosion of productive sectors that employ most of the workforce.

The way forward demands more than technical adjustments; it requires political will. Provincial governments must be held accountable for price monitoring failures. Federal agencies should establish real-time reporting systems with automatic penalties for violators. Investment in agricultural infrastructure—cold storages, processing units and supply chain modernisation—must accelerate to curb post-harvest losses. Most critically, the disconnect between macroeconomic indicators and public welfare must be bridged through targeted subsidies, wage protection and stringent anti-profiteering measures.

Pakistan stands at a crossroads. March 2025 CPI data and GDP figures reveal an economy with selective resilience and systemic fragility. The widening chasm between wholesale and retail prices speaks of a governance breakdown where policy successes on paper translate into hardship on the ground.

Without urgent reforms in market regulation, agricultural productivity and industrial revival, the country’s economic recovery will remain a mirage for the millions struggling to afford necessities. The time for half-hearted measures is over; only decisive action can restore public trust and ensure that growth benefits all, not just a privileged few.

Simultaneously, the country must revive its industrial base through targeted subsidies for export-oriented sectors and energy tariff rationalisation. Special Economic Zones should be expanded with a guaranteed 24/7 power supply to attract manufacturing investment. To protect vulnerable households, the Benazir Income Support Programme should be expanded into a comprehensive social protection system that adjusts payouts with inflation.

The State Bank of Pakistan must develop inflation-indexed savings certificates to preserve citizens’ purchasing power. Finally, a national civic engagement campaign should be launched where citizens can report price gouging via a mobile app with guaranteed 48-hour response times from district administrations.

These measures, if implemented transparently, can break the cycle of policy failure and public suffering. By combining technological solutions with strong accountability mechanisms and targeted subsidies, the nation can transform its economic recovery from a statistical illusion into tangible improvements in household welfare.

The government must also prioritise education and vocational training to equip the workforce with skills for emerging industries, particularly in renewable energy and technology sectors. Public-private partnerships should be encouraged to build affordable housing and improve urban infrastructure. A national nutrition programme targeting children and pregnant women can help break the intergenerational cycle of poverty. With coordinated efforts across all levels of government and society, the country can build a more resilient economy that works for all its people.

Dr Ikramul Haq, writer and advocate of the Supreme Court, is an adjunct teacher at Lahore University of Management Sciences.

Abdul Rauf Shakoori is a corporate lawyer based in the USA.