New Delhi, Jan 3 (IANS) Pakistan stares at several economic challenges in 2026 amid continuing low economic growth, recurring militant attacks and potential disasters related to climate change, according to a new report.

A report in Nikkei Asia by Farhan Bokhari said that the country has avoided default on its foreign debt payments — owing to a timely intervention by the International Monetary Fund in 2024 with a $7 billion loan through 2027 — but faces major challenges this year.

The country’s prevailing annual economic growth rate of just 3 per cent “does not compare well to being barely above the annual population growth rate”.

It is also clear that reviving economic growth presents Pakistan with many tough challenges, the report said.

“Pakistan must intensify the pace of its internal reforms, notably to tackle conditions surrounding the bulk of its population. More than 40 per cent of Pakistan’s population of roughly 257 million people live in abject poverty. Besides, the country has an alarming level of illiteracy, with just under 40 per cent of the population considered illiterate,” the report stressed.

Notably, Pakistan’s internal political divisions have undermined the confidence of investors, notably those who need to take a long-term perspective.

“Unless the political tussle is brought to an end, investors are likely to remain wary of making medium- or long-term commitments. Without a strong surge in fresh investments, which is being held back due to the internal political divide, Pakistan is set to remain locked in a continuing cycle of low economic growth,” said the report.

Moreover, Pakistan witnessed large-scale destruction caused by heavy rainfall and floods and the nation will likely witness 20 per cent higher rainfall in 2026 than the previous year.

According to the report, other alarming indicators include the reality of almost a third of children in Pakistan below the age of five suffering from stunted growth due to chronic malnutrition and failure over the long run to grow its economy faster and make distribution of wealth more equitable.

–IANS

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