Pakistan’s manufacturing sector slump: Private investment plunges 46%; experts warn of long-term industrial decay

Pakistan’s manufacturing industry, once considered a key driver of economic growth and employment, is undergoing one of its worst downturns in recent history. The sector has seen a steep 46 per cent fall in private investment over the past six years, raising fears of long-term stagnation among economists and industrial experts.According to The Express Tribune report cited by news agency ANI, private investment in manufacturing dropped from PKR 706 billion in FY2018–19 to just PKR 377 billion in FY2024–25, marking the weakest phase of industrial growth in more than a decade. Ali Imran Asif, Senior Executive Committee Member of the Lahore Chamber of Commerce and Industry (LCCI), warned that the current level of investment was “not enough to even replace depreciating machinery,” suggesting a deep erosion of Pakistan’s industrial foundation.“We are not dealing with a short-term dip; we are watching our industrial base disintegrate,” Asif said, as per The Express Tribune. He stressed that without structural reforms focused on productivity, innovation, and competitiveness, the country could face prolonged industrial paralysis.The combined contribution of the manufacturing and mining sectors to Pakistan’s GDP has remained stagnant at around 13.2 per cent over the past six years. Frequent policy changes, high energy costs, and volatile currency movements have severely affected export-oriented sectors such as textiles, leather, and engineering goods. Large-scale manufacturing output fell 1.5 per cent in FY25, reversing the 0.92 per cent growth recorded in FY24.In contrast, neighbouring economies like India and Bangladesh have maintained strong industrial growth supported by stable policies and export diversification. Economist Shahid Saleem noted that Pakistan’s slump is not merely the result of high interest rates but also reflects policy inconsistency and eroding investor confidence. Import restrictions and weak domestic demand have forced many factories to run below capacity, he added.Experts, as cited by ANI, warned that unless Pakistan swiftly formulates a credible industrial revival plan and ensures policy stability, the manufacturing sector’s decline will deepen further, undermining exports, employment and broader economic resilience.