Karachi, December 17, 2025 – Pakistan’s economy presents a stark dichotomy as the Pakistan Stock Exchange (PSX) continues its bullish run, with the benchmark KSE-100 index surging nearly 40% in 2025 and recently hitting all-time highs around 171,000 points. This liquidity-driven rally, fueled by local investors fleeing low-yield bank deposits and real estate, has been bolstered by macroeconomic stabilization under a $7 billion IMF Extended Fund Facility, fiscal surpluses, a stable currency, and inflation dipping below 5%.
In sharp contrast, the real sector—particularly large-scale manufacturing (LSM) and the vital textile industry—is in deep distress. Over 100 major textile mills and nearly 400 cotton ginning factories have shuttered by November 2025, leaving industrial hubs like Faisalabad and Gujranwala eerily silent with idle looms and reduced capacity. High electricity tariffs at 12-14 cents per kWh—double those in competitors like Bangladesh and Vietnam—stem from a Rs2.4 trillion circular debt and IMF-mandated subsidy removals. Aggressive taxation on industry and SMEs, while sparing retailers and elites, has further squeezed operations.
This disparity has triggered massive brain drain, with over 720,000 skilled workers emigrating in 2024 and nearly 700,000 more by November 2025, boosting remittances but eroding domestic human capital. Experts warn of creeping de-industrialisation, where financial stability benefits asset holders but fails to revive production and jobs.
Economist Ahmad Mukhtar highlights the unsustainability: “A recovery that enriches asset holders while shuttering factories is unsustainable.” Without urgent reforms to slash energy costs and incentivize manufacturing, Pakistan risks a fragile economy reliant on informal sectors and exported labor rather than goods.
As 2025 ends, policymakers face pressure to pivot toward real-sector revival to ensure inclusive growth.