Pakistan’s Image-Building Expenses Raise Concerns Amid Economic Crisis

Pakistan’s recent efforts to grab global diplomatic headlines and high‑profile international engagements risk masking deep economic and governance problems at home, a new report has said, warning that image‑building comes at a heavy cost when fundamentals deteriorate. The report from The European Times said Islamabad’s role as a diplomatic interlocutor in the Iran crisis comes at a time when its economy is ailing with rising poverty and mounting debt.

The publication claimed that Pakistan has been using multiple diplomatic reasons to stay in the limelight recently including entering the Mecca Pact, emerging as a defence supplier, and the Pakistani leadership taking multiple trips abroad. These PR endeavours cost Islamabad millions of US dollars, and raise concerns about "the ethics of the expenditure," when the country is undergoing a forex crisis and rising inflation. Further, "the funambulist stunts of forging deeper ties with Washington on one side while managing Beijing on the other would incur high costs to Islamabad." Pakistan's fleeting macroeconomic stability is insufficient to place the country on a long-term growth trajectory.

"The Iran crisis and the UAE’s request for payback were strong enough blows to make Pakistan’s economy fret and seek quick external help, which keeps on increasing its already heavy debt burden," the report noted. Further, the government’s growing defence spending has squeezed resources for health, education necessary for long-term steady growth. "Consistent underinvestment in technical and vocational education and female labour market participation has trapped the economy in a low-income trap," the publication said.

It alleged rampant corruption in the economy, with the elite eating away around 6 percent of potential GDP. Pakistan's share of exports to GDP has fallen from around 16 percent in the 1990s to about 10.4 percent in 2024, while the debt-to-GDP ratio touched nearly 70 percent. The country's weak industrial base and excessive dependence on the textile sector, nullifies scope to diversify into high-value sectors like electronics, pharma, and machinery.

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