With exports, FDI on the wane, economic productivity takes a hit

Exports as a percentage of GDP have consistently declined while poor Foreign Direct Investment (FDI) could not generate higher economic productivity, said the State Bank of Pakistan (SBP). In a detailed research in the half-yearly report on the State of the Economy 2024-25, released on Monday, the central bank observed that one of the key underlying issues facing Pakistan’s economy was weak competitiveness. “From a macroeconomic perspective, this is reflected in consistently declining exports (as a percentage of GDP), low FDI, and overall insufficient integration with global value chains (GVC),” said the report. From a micro perspective, this is reflected in the low quality of products, the higher unit cost of production, inability to create brands in international markets, and other ancillary indicators, the report added.