As Pakistan nears the end of 2025, industrial and commercial circles are expressing growing concern over the country’s economic trajectory. Business leaders are warning that unless decisive measures are taken to support productive sectors, high operational costs, weak competitiveness, and policy uncertainty could further slow economic momentum in 2026.
Khawaja Mehboob ur Rehman, president of the Pakistan Business Forum (PBF), said that while macroeconomic stability had improved compared to previous years, ground-level conditions for businesses remained challenging. In a letter to the Prime Minister, Rehman highlighted that 2025 had once again proved difficult for industry and investment. “Despite repeated commitments, the core issues of ease of doing business and a sustainable reduction in operational costs have not been addressed in a meaningful way,” he stated, adding that these challenges had limited firms’ ability to plan and expand.
Industry representatives continue to cite high input costs as a significant obstacle. Electricity tariffs, fuel prices, taxes, and financing costs remain heavy burdens on manufacturers and exporters. Official data indicates that industrial electricity tariffs in Pakistan remain considerably higher than those in neighboring economies, putting local firms at a disadvantage amid intense global competition. Economists note that although exports showed some recovery during FY2024-25, growth remained modest compared to regional peers benefiting from cheaper energy and targeted industrial support.
Rehman emphasized that rising energy costs were directly undermining productivity and export competitiveness. “These pressures are eroding our ability to compete with regional economies that actively support their industries through competitive pricing and pro-growth fiscal policies,” he said. He also cautioned that potential increases in electricity tariffs, as part of efforts to address the country’s circular debt issue, could force industrial units to downsize or shut down operations.
Energy pricing has emerged as a particularly sensitive issue for sectors including textiles, engineering, and chemicals, which collectively employ millions. Analysts warn that any sharp increase in production costs could further strain employment at a time when job creation is already under pressure.
Beyond cost challenges, business leaders have raised concerns about broader economic policymaking. Rehman argued that current policies are heavily focused on meeting International Monetary Fund (IMF) programme conditions, leaving limited room for growth-oriented and innovative solutions. “Sustainable recovery cannot be achieved without empowering the business community, which remains the backbone of employment, exports, and revenue generation,” he said.
Independent industry voices emphasize the need for a balance between fiscal discipline and growth. Mid-scale manufacturer Rameez Ahmed stressed that structural reforms must be implemented in consultation with businesses. “No one is denying the need for reforms or IMF engagement,” he said. “But policies designed without industry input often fail on the ground. Businesses need predictability, competitive energy pricing, and a tax system that rewards documentation and growth.”
Limited representation of elected business leaders in newly formed economic committees and working groups has also been criticized. Industry stakeholders argue that excluding key players in production and trade undermines policy effectiveness and slows implementation. They say meaningful consultation could bridge the gap between policy objectives and market realities.
As Pakistan looks toward 2026, business leaders are calling for a credible roadmap to restore confidence, attract investment, and support long-term planning. “Inflation has eased compared to earlier peaks, and interest rates are expected to gradually normalise. This period offers an opportunity to reset policies in favor of growth, but only if cost pressures and competitiveness challenges are addressed in a timely and inclusive manner,” Ahmed added.
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