- Pakistan balanced economic challenges with notable achievements in 2024, requiring sustained efforts from all stakeholders
- Agriculture rebounded, IT thrived, and rupee stabilised, but energy inefficiencies and export limits persisted
Interview with Mohammad Iqbal Ghori — former president Institute of Cost & Management Accountants of Pakistan, former CFO FESCO, former DG Finance PEPCO
PAGE: Tell me something about yourself, please.
Mohammad Iqbal Ghori: I am a finance and strategy professional with over 30 years of experience in corporate leadership, sustainability, and organisational transformation. Currently, I serve as the Director of Finance and Strategy at Sadaqat Limited, a vertically integrated textile company with annual exports exceeding USD 160 million. My career highlights include managing portfolios worth over USD 300 million and leading the integration of spinning, weaving, and apparel divisions to drive sustainable growth. I played a pivotal role in transforming a family-owned business into a professionally managed corporate entity.
By introducing governance frameworks and fostering a corporate culture, I introduced modern business practices, ensuring long-term competitiveness and transparency on the board. Beyond the textile sector, I have made significant contributions to the power industry as Director General Finance at PEPCO, where I collaborated with USAID, the World Bank, and IFC on critical energy reforms.
As President of ICMAP, I championed financial education and professional development, advancing the standards of the finance profession in Pakistan. My recent achievements include driving renewable energy initiatives, such as a solar project, and implementing SAP solutions to enhance operational efficiency. I am deeply committed to mentoring emerging leaders and contributing to global discussions on economic policies, regulatory frameworks, and sustainable business practices.
PAGE: How was 2024 for the global economy?
Mohammad Iqbal Ghori: The global economy in 2024 experienced moderate growth, with global GDP increasing by approximately 3.1%. Advanced economies faced slower recovery due to persistent inflation and high interest rates. The US economy grew at 1.8%, supported by consumer resilience and strong labour markets, while the eurozone expanded by 0.7%, hindered by weak industrial output and sluggish investment. Emerging markets outperformed, led by India (6.3%) and China (5%), fueled by robust domestic demand and policy support.
Monetary policies varied significantly across regions:
- United States: The Federal Reserve kept policy rates at 5.25–5.50% to control inflation.
- Eurozone: The European Central Bank reduced rates slightly to 4.0% to stimulate tepid growth.
- China: The People’s Bank of China maintained rates at 3.55% to encourage economic activity.
- India: The Reserve Bank of India held rates at 6.5%, balancing inflation control and growth.
- Pakistan: The State Bank of Pakistan reduced its policy rate to 13% by December, marking a 200-basis-point cut to stimulate domestic demand amidst easing inflation.
Consumer behaviour in 2024 reflected mixed patterns. High inflation in advanced economies led to restrained discretionary spending, with consumers prioritising essentials such as food and housing. In contrast, emerging markets witnessed stronger consumer demand, driven by recovering labour markets and government stimulus. Global e-commerce sales exceeded USD 6 trillion, as convenience-driven shopping became a cornerstone of consumer behaviour.
Geopolitical tensions remained a dominant factor influencing the global economy. The Russia-Ukraine conflict kept energy prices volatile, with oil averaging USD 85-90 per barrel, placing inflationary pressure on net importers. Meanwhile, BRICS expanded its membership, adding Saudi Arabia and UAE, marking a significant step towards reshaping global economic alliances.
Sustainability gained momentum globally, with renewable energy investments surpassing USD 1.7 trillion. Consumers increasingly demanded environmentally conscious products, compelling companies to adopt ESG-compliant practices. The green economy continued to grow, with renewable energy transitions and circular business models becoming central to corporate strategies.
Despite these advancements, many developing countries struggled with high debt servicing costs and limited fiscal space, widening the gap between advanced economies and emerging markets. The uneven global recovery underscored the need for coordinated fiscal and monetary policies to ensure inclusive growth in the years to come.
PAGE: Did the Pakistani economy fare well in 2024 vis-à-vis 2023?
Mohammad Iqbal Ghori: The Pakistani economy in 2024 showed modest improvements compared to 2023, though challenges persisted. GDP growth rose to 2.5%, recovering from a contraction of 0.22% in 2023. This improvement was driven by a rebound in agriculture, steady textile exports, and resilient remittance inflows. Inflation fell to 4.9% in November 2024, marking its lowest level in six and a half years, thanks to easing global commodity prices and effective monetary measures.
The State Bank of Pakistan (SBP) played a pivotal role in stimulating economic activity, reducing the policy rate by 200 basis points to 13% in December, marking the fifth consecutive cut since June. This policy shift aimed to boost private sector borrowing and domestic demand. Foreign exchange reserves stabilised at USD 9.5 billion by year-end, supported by remittances of approximately USD 29 billion and sustained export earnings of USD 18.5 billion, largely from the textile sector. The textile sector, contributing 60% of the country’s exports, remained a cornerstone of economic stability. Global demand, particularly from key markets, helped maintain export momentum.
Additionally, the stabilisation of the Pakistani rupee in the second half of the year, following a 12% depreciation earlier, provided the sector with opportunities to improve cost predictability and negotiate better export contracts. The government’s energy subsidies and targeted incentives further supported textile exporters.
Despite these positive developments, significant structural challenges persisted:
- The deficit remained high at 7.5% of GDP, reflecting unsustainable public expenditures and a narrow revenue base.
- The power sector’s unresolved circular debt, hampering industrial productivity and energy supply.
Opportunities also emerged in renewable energy and digital services. Renewable energy projects added 1,200MW to the grid, reducing reliance on imported fuels, while the IT sector contributed USD 3.5 billion to exports, showcasing Pakistan’s potential in the digital economy. The stabilised currency supported both textiles and IT, enhancing competitiveness in global markets.
While 2024 marked a recovery phase, achieving sustainable growth will require addressing power sector inefficiencies, reducing fiscal imbalances, and diversifying exports beyond textiles. The stabilising currency presents a unique opportunity to attract foreign investment and strengthen Pakistan’s trade position in the coming years.
PAGE: How would you comment on the challenges and achievements of the Pakistani economy in 2024?
Mohammad Iqbal Ghori: The year 2024 was a critical phase for Pakistan’s economy, marked by significant challenges but also notable achievements. Policymakers made considerable efforts to stabilise the macroeconomic environment, but other stakeholders, especially regulators, must now play a more active role in sustaining this progress.
Challenges
1. Pakistan’s fiscal deficit improved to 6.8% of GDP in FY24, down from 7.7% in the previous year. While this reflects fiscal consolidation efforts, such as revenue-enhancing measures and expenditure controls, further reductions are essential to achieve long-term sustainability.
2. The power sector’s circular debt exceeded PKR 2.5 trillion, straining energy distribution companies (DISCOs) and disrupting industrial growth. Despite renewable energy gains, inefficiencies in power distribution remained a significant hurdle.
3. External debt repayments exceeding USD 20 billion pressured foreign reserves, which stabilised at USD 9.5 billion by year-end. The rupee depreciated by 12% in the first half of the year, raising import costs and inflationary pressures, although it stabilized in the latter half.
4. Policymakers, including the State Bank of Pakistan (SBP) and the Ministry of Finance, played a constructive role. However, regulators like the National Electric Power Regulatory Authority (NEPRA) fell short in addressing inefficiencies in the energy sector and enforcing accountability among DISCOs.
Achievements
Agriculture: A rebound in agriculture contributed to GDP growth of 2.5%. Higher wheat and cotton yields, aided by subsidies and favourable weather, supported rural incomes and export performance.
Textile sector resilience: The textile sector, which contributes 60% of Pakistan’s exports, generated USD 18.5 billion in earnings, supported by global demand and stable energy subsidies. Stabilisation of the rupee further enhanced the sector’s competitiveness in export markets.
Monetary and inflation management: The SBP reduced the policy rate to 13% by December, marking five consecutive cuts aimed at stimulating economic growth. Inflation eased to 4.9% by November, providing relief to businesses and consumers.
IT and renewable energy growth: The IT sector contributed USD 3.5 billion to exports, showcasing Pakistan’s potential as a regional hub for digital innovation. Renewable energy projects added 1,200MW to the grid, reducing reliance on costly imported fuels and stabilising industrial energy supply.
Currency stabilisation:
The rupee’s stabilisation in the second half of the year provided cost predictability for businesses and improved export competitiveness in key sectors like textiles and IT.
While policymakers have laid the groundwork for economic stability, the responsibility now shifts to other stakeholders:
a. Regulators must strengthen enforcement and accountability. For example, NEPRA must adopt a comprehensive approach to tackle the circular debt crisis and improve DISCO efficiency.
b. Industry leaders must invest in diversifying exports and improving productivity to reduce dependence on a narrow export base.
c. Private sector and civil society must align efforts with national sustainability goals, leveraging renewable energy and digital transformation for long-term economic growth.
In summary, Pakistan’s economy made notable strides in 2024, but structural inefficiencies and regulatory gaps remain critical challenges. A collaborative effort among policymakers, regulators, and the private sector will be key to unlocking sustained and inclusive growth.
PAGE: How would you comment on the growth of the economy during the current year in the wake of the developments that took place in 2024?
Mohammad Iqbal Ghori: A year of unseen potential in Pakistan’s economic resilience, while mainstream narratives around Pakistan’s economy in 2024 focused on agriculture, textiles, and IT, several critical and often overlooked areas contributed to the country’s growth trajectory. These untapped opportunities hold the key to long-term sustainability.
Hidden strengths driving growth
Informal economy a silent giant: Pakistan’s informal economy, which accounts for nearly 35-40% of GDP, remains a critical yet underappreciated driver of resilience. Sectors like retail, informal manufacturing, and home-based businesses showed remarkable growth during 2024, absorbing labour displaced by economic challenges in the formal sector. Policymakers have yet to integrate this sector into the mainstream through digitisation and financial inclusion initiatives, which could add billions to GDP.
Regional trade: A missed opportunity, but a glimmer of hope. Despite geopolitical tensions, regional trade potential with Central Asia and Iran offered new opportunities. Pakistan’s recent agreements for barter trade with Iran in food and energy, alongside enhanced connectivity via Gwadar, are laying the groundwork for trade volumes that could exceed USD 2 billion annually in the coming years.
Remittance channel optimisation: Remittances, which contributed USD 29 billion in 2024, are still underleveraged for productive investments. While the government introduced diaspora bonds and tax incentives, a comprehensive remittance policy tied to SME financing and infrastructure projects could unlock transformative value.
Tourism a sleeping growth giant: Pakistan’s vast tourism potential — ranging from the scenic northern regions to historical and religious sites — remains largely untapped. With global tourism recovering post-pandemic, Pakistan attracted over 1.5 million tourists in 2024, a 40% increase compared to the previous year. However, a lack of infrastructure and marketing limited the sector’s full potential. Targeted investments in eco-tourism and heritage preservation could turn this into a multi-billion-dollar industry.
SME growth and domestic demand: Small and medium enterprises (SMEs), often overlooked in economic narratives, showed robust performance in sectors like logistics, agro-processing, and e-commerce. Government-backed digital platforms for SME financing allowed thousands of businesses to access credit in 2024, laying a foundation for localised growth and job creation.
Challenges and structural bottlenecks
Underutilisation of Gwadar and CPEC Phase II: Gwadar Port and the second phase of the China-Pakistan Economic Corridor (CPEC) offered significant growth potential, particularly in logistics, industrial zones, and regional trade. However, bureaucratic delays and infrastructure gaps prevented Pakistan from fully capitalising on these opportunities.
Energy crisis and circular debt: The energy sector’s circular debt, exceeding PKR 2.5 trillion, continued to disrupt industrial productivity. While renewable energy projects added 1,200MW to the grid, systemic inefficiencies in energy distribution persisted, highlighting the need for regulatory reforms.
Export concentration and lack of diversification: Pakistan’s export base remains over-reliant on textiles, which account for 60% of total exports. While IT exports reached USD 3.5 billion, other sectors, such as pharmaceuticals and agro-based products, remained underdeveloped.
Lack of regulation for digital currencies and blockchain: With increasing adoption of blockchain and cryptocurrency solutions, Pakistan risks falling behind without clear regulations. Digital currencies are currently operating in a regulatory gray area, leaving consumers, investors, and businesses vulnerable to fraud and market instability. Comprehensive policies are needed to harness the potential of cryptocurrencies while addressing concerns about money laundering, tax evasion, and cybercrime.
Opportunities for transformation
Technology-driven informal sector integration: By digitising and formalising the informal economy through mobile payments and microcredit platforms, Pakistan could expand its taxable base and create a more equitable growth framework.
Unlocking tourism and hospitality: With improved infrastructure, marketing, and visa policies, Pakistan’s tourism revenues could exceed USD 5 billion annually within five years, leveraging its unique cultural, religious, and ecological diversity.
Diaspora engagement beyond remittances: Pakistan’s diaspora of over 9 million represents an untapped resource for technology transfer, trade facilitation, and investment. Programmes to mobilise diaspora expertise and funding for infrastructure and startups could amplify economic recovery efforts.
CPEC Phase II execution: Fast-tracking industrial zones under CPEC could boost manufacturing and exports while creating over 500,000 new jobs. Collaborative efforts with Chinese investors in high-tech sectors such as electronics and EVs could further diversify Pakistan’s export base.
Regulating digital currencies and blockchain innovation: Establishing a regulatory framework for cryptocurrencies and blockchain technologies could position Pakistan as a regional leader in decentralised finance (DeFi). Clear policies would attract foreign investors, foster innovation, and reduce risks associated with illegal activities. The State Bank of Pakistan and the SECP must work collaboratively to create guidelines for digital currency adoption and blockchain deployment in financial services.
Pakistan’s youth — architects of economic resilience in 2024
Pakistan’s youth demographic, accounting for 63% of the population under 30 years old, emerged as a major economic force. In the IT sector, young entrepreneurs and freelancers contributed USD 3.5 billion in exports by developing cutting-edge solutions in fintech, blockchain, and AI. Government-backed programmes like DigiSkills.pk trained over 2 million individuals in digital skills, further fueling this transformation.
While 2024 showcased Pakistan’s resilience through traditional sectors like agriculture and textiles, the country’s young population proved to be the true game-changer. From digital exports to agritech and renewable energy, youth-led innovation is driving economic recovery and shaping a sustainable future.
Unique perspective
From barter trade to blockchain: Pakistan’s 2024 economic recovery holds unseen potential and 2024 was a year of resilience, not just in traditional sectors like agriculture and textiles, but in areas often ignored by mainstream narratives. Whether it’s the informal economy’s quiet strength, the untapped. By integrating youth-led innovation, blockchain technologies, and robust regulatory frameworks for digital currencies, Pakistan can transform itself into a hub for decentralised finance and technology-driven economic growth. The question is no longer if regulation is needed but when Pakistan will lead the charge.