As the global geopolitical landscape continues to shift, Pakistan finds itself at a critical juncture, grappling with complex domestic issues and external pressures. With the incoming second term of the Trump administration in the United States, the country’s deep state is watching closely. The opposition party, PTI, seems to be hoping that changes in Washington could present an opportunity to defuse its existential challenges. However, despite sending mixed signals about its willingness to cooperate, Pakistan’s politics are increasingly influenced by the geopolitical maneuvers of the US, China, the European Union, Russia, and even Israel.
At the same time, Pakistan is confronting serious domestic problems, including growing socio-political divisions and a surge in militancy. Parochialism, religious extremism, and intolerance are threatening to fragment the country’s unity. The recent increase in terrorism and militancy in Pakistan underscores the volatile environment in which the economy is trying to recover.
Yet, for an economy to function effectively, a nuanced understanding of the socio-political landscape is not enough. It is essential to develop a clear roadmap for recovery and to begin the necessary reforms. Unfortunately, the current economic recovery effort in Pakistan lacks the well-thought-out planning required for long-term growth. Even as the hybrid government attempts to present this recovery as a success, the truth is that it is far from a well-executed strategy. Pakistan needs to take decisive steps toward building a sustainable and resilient economy that can move forward in the evolving world order.
With millions of Pakistanis unemployed and living below the poverty line, 2025 must be focused on rapid economic growth. However, the question remains: When and how will this national spirit emerge? This is a critical moment for Pakistan, one that could determine the future course of its economy and political landscape.
The uncertainty surrounding the repatriation of Afghan refugees following the Taliban’s return to power in Kabul adds to the country’s geopolitical challenges. This issue could complicate Pakistan’s ongoing efforts in the fight against terrorism, making it more costly and complex. Meanwhile, the ceasefire between Israel and Hamas, brokered by the US, has left the establishment wary about the long-term stability of the Middle East and Israel’s future actions in the region. This geopolitical tension is further compounded by the disarray within PTI and the anxiety within Pakistan’s political elite regarding the strength and future of the current regime.
Such internal and external issues have led to economic uncertainty in Pakistan. Policy shifts are frequent and often abrupt, contributing to unrealistic economic projections while sidelining critical issues. For example, the country’s warning signs about a looming drought, due to insufficient rainfall, are being ignored. Additionally, concerns regarding the equitable sharing of national water resources between provinces remain unresolved.
Further complicating matters is the Prevention of Electronic Crimes Amendment Bill of 2025, which has been met with significant opposition from journalists and civil society. The speed with which this bill was passed by the National Assembly, coupled with its potential to silence dissent, has sparked criticism. While the government claims the bill is essential for national security in cyberspace, it appears to be a mechanism for curbing freedom of expression and stifling opposition voices.
The country’s political parties must adopt a more flexible and mature approach to resolving these issues. If Pakistan’s ruling parties—PML-N, PPP, and PTI—continue to clash without finding common ground, the risk of reversing economic progress will remain high. The recent easing of inflation has come at a significant cost, with millions of people still without jobs and living in poverty. Meanwhile, the stability of the Pakistani rupee has been achieved, but it has involved some uncomfortable geopolitical choices, narrowing the country’s ability to pursue a homegrown development strategy.
Despite these challenges, the International Monetary Fund (IMF) still predicts a modest 3% GDP growth for Pakistan in 2025. However, this growth rate is unlikely to create the job opportunities or improvements in living standards that are needed to address the country’s widespread poverty. Pakistan requires faster and more inclusive growth in the years ahead—growth that will not be possible without initiating social reforms that can help reshape the nation’s identity as a unified state. Only through this transformation can Pakistan hope to move beyond its current state of political fragmentation and economic stagnation.