Pakistan’s Economic Crisis: The Role of Youth in Bringing About Revolution

Written by Rai ul Ain

Pakistan, the 45th largest economy in the world, has been facing a chronic decline in economic development over the past decades. With a more than 70 percent average debt to GDP ratio, the country’s economic crisis can be attributed to increasing political, social, and institutional issues. Despite the significant downturn, hope lies in the youth of Pakistan which, comprising 64% of the total population, carries a largely undiscovered yet promising potential to bring about a revolution in the current economic state of the country.

In the fiscal year 2023-2024, Pakistan once again failed to meet the target GDP growth of 3.5% by achieving a total of 2.38%. The reason for such economic downfall lies in the decades-long malpractice involving the intricacies of economic policy-making and politics. Unsustainable growth models, poor policy implementation, lack of value-based projects, negative trade balance, and political instability are some key factors responsible for the persistent crisis. As of 2022, the real estate market which is regarded as relatively non-sustainable for the country’s economic growth, is expected to grow by 4.01% in five years. Increased power consumption and inefficient utilization of renewable resources have led to a significant imbalance in trade thereby putting a negative pressure on the economy. Further deterioration is caused by poor decision-making in taxation and foreign investments contributing towards subpar long-term revenue generation.

In such worsening circumstances, the youth of Pakistan can emerge as an incredible asset for making major reforms in various economic aspects. There are numerous ways through which younger minds can influence a country’s political economy. First and foremost is entrepreneurship. Pakistan’s young talent should opt for innovative businesses and initiatives that can generate revenue in the long run. Domestic manufacturing projects, especially in the industrial, agriculture, and IT sectors should be encouraged and funded to balance the country’s current account deficits. The state should open opportunities for its youth to bring forth their ideas and launch support programs to aid in their projects. Change is needed on a government level to acknowledge the need for deviation from less sustainable practices like real estate, debt servicing, etc. to more value-driven initiatives. By establishing a sustainable growth model via entrepreneurship, one can open doors for future job security ultimately leading to the retention of talent in Pakistan to foster further economic growth.

It is also essential for the young population to focus on skill development to grow in the manufacturing sectors and increase their foreign demand. With a 2.0 USD Bn trade deficit in July 2024, Pakistan has a significant imbalance in imports and exports. One of the major reasons for this deficit is the absence of technological progress to provide profitable exports along with a chronic dependency on imports without much profit margin which puts pressure on the country’s current accounts. While entrepreneurship is considered a powerful tool to tackle this issue, emphasis must be laid on incorporating gainful measures for deriving value and revenue to boost the economy. Young individuals must also get into research and development in all the emerging and established fields. The innovations proposed by the youth require to be backed by scientific research and databases to be able to create the anticipated impact on the country’s economy.

The agriculture and energy sectors comprise a major percentage of the country’s GDP. Unfortunately, Pakistan has failed to upgrade its natural resources as per the advancement in technology. Renewable energy constitutes merely 7% of Pakistan’s total installed power generation capacity. Through awareness programs, youth should be encouraged to explore renewable resources like wind, solar, and biomass for energy production. Skilled individuals should be inducted to bring about scientific reforms to balance out Pakistan’s power consumption for an eventual shift towards a sustainable growth model. Similarly, the labor in the agriculture sector should be made skillful to meet the current technological standards.

Another aspect through which a country’s economy can be transformed is by delegation of authority to the young. It is rightly said that the learners of today are the leaders of tomorrow. With a strong educational background, young individuals driven for change should be granted leadership positions where they are authorized for decision-making and policy implementation. This way, Pakistan would be able to adopt new models and get rid of the age-old economic practices that have led the country towards a default. The issue of scarcity of resources for the development of financial literacy can be tackled through exchange programs, induction of foreign faculty, and the formation of learning circles to deliver authentic knowledge to students for creating future leaders with the potential to strengthen the country’s economic system.

Given the increased rate of immigration of younger individuals to other countries, Pakistan is among the top 6 countries to receive the most remittances each year. While one way to look at it is to lament the downside of not having substantial resources for the population to work in their own country, Pakistan must also leverage the positive side of this remittance and adopt policies for reserving it for the development of science and technology to counter the country’s current account deficits. Similarly, accomplished individuals living abroad should be encouraged to facilitate the youth in Pakistan through remote learning, teaching programs, observerships, webinars, and global collaborations to make the country worth living for future generations. It is also vital to ensure equal opportunities within the country’s capacity for both men and women. Despite a greater proportion of females in colleges and universities, the Labor Force Participation Rate (LFPR) of females in Pakistan is only 21% as per the 2023 UN report. This reflects the fact that most of the educated population is not able to work due to various societal, marital, and stereotypical reasons. Immediate steps are needed to provide an equivalent platform for women to contribute towards the economic growth of Pakistan.

A variety of solutions have been proposed in the past few years to reverse the economic crisis faced by Pakistan. However, little progress is seen on the systematic level primarily because of the antiquated mindset of both the state and citizens. Change on a micro-level is only possible through the shift in mindset towards the economy on a macro-level. A vision of excelling in the supply domain instead of leaning towards the demand side must be incorporated into young minds. The state also needs to incentivize its population for domestic building and work strategically on foreign investments to buy technology that could generate revenue exponentially. Resources should be utilized wisely in sectors like education, IT, agriculture, AI, and energy to achieve consistent financial growth. Furthermore, capital should be invested in urban infrastructure to upgrade the industrial grounds. Through the adoption of an entrepreneur mindset, delegation of authority to experts, inclusion of youngsters in policy-making, continuous education, and promotion of research and innovation among youth, Pakistan can be hopeful of combating the increasing financial dependency and transforming into a sustainable economic state in the coming years.