- Pakistan’s economic success hinges on structural reforms and sustainable practices
Interview with Mohammad Shoaib — CEO, Lucky Investments Limited
PAGE: Tell us something about yourself?
Mohammad Shoaib: I am an MBA, CFA Charterholder Harvard Business School alumnus. I have over three decades of experience in capital markets. Since 2003 I have focused exclusively on Islamic capital markets. I have been founder CEO of Al Meezan Investments and have been instrumental in making it the largest AMC in Pakistan over the years. Very recently, I have taken over as co-founder and CEO of Lucky Investments Limited, set up in collaboration of one of the largest business conglomerates Younus Brothers Group (YBG), the sponsors of Lucky Cement, Gadoon Textiles, Lucky Motors, Lucky Electric, Younus Textiles, and many other companies. I have to my credit setting up and being Founder President of CFA Society Pakistan in 2002 where I have served in various volunteer capacities over the last 20 years. Currently I am member of AAOIFI Governance & Ethics Board. Over the last two decades, I have served on various boards in volunteer capacity and have been a speaker at various forums on Islamic Finance & Capital Markets.
PAGE: How could 2025 be for the global economy?
Mohammad Shoaib: The global economy in 2025 is expected to be shaped by a mix of recovery efforts from past disruptions, ongoing geopolitical tensions, and the rapid adoption of technological advancements. Different regions and sectors will experience varied growth trajectories, but several overarching themes are likely to dominate, which includes:
Economic recovery and growth
While the aftershocks of the Covid-19 pandemic will have largely subsided, economies will still be dealing with structural shifts it induced. Developed economies may see moderate but steady growth, likely between 2-3% annually. The focus will shift to enhancing resilience against future shocks through supply chain diversification and robust healthcare infrastructure. Emerging markets, particularly in Asia and Africa, are anticipated to grow at faster rates due to their expanding middle classes, younger populations, and technological adoption.
Regional breakdown
- North America and Europe: Both regions will focus on green technologies, digitalisation, and climate adaptation. The US is expected to maintain robust economic activity due to technological innovation, while Europe will prioritize sustainable development goals. Growth rates may remain moderate due to aging populations and economic saturation in certain sectors. Donald Trump may impose heavy tariffs on imports from China which my fuel inflation.
- Asia-Pacific: The region is poised to lead global growth, driven by China, India, and Southeast Asia. China Belt and Road Initiative and India will focus on infrastructure and technology will play significant roles. However, geopolitical tensions, particularly around Taiwan and South China Sea disputes, could pose risks.
- Africa: Rapid urbanisation, resource investments, and technology adoption could make Africa one of the fastest-growing regions. Key challenges include governance issues and limited infrastructure.
- Middle East and Latin America: Oil-dependent economies in the Middle East will continue diversifying into non-oil sectors, while Latin America’s recovery will depend on political stability and global commodity prices.
Key trends influencing 2025
- Green transition: The shift towards renewable energy and net-zero carbon commitments will accelerate, influencing energy markets, technology, and global trade.
- Digital transformation: Artificial intelligence, blockchain, and IoT will redefine industries, improving efficiency and creating new economic opportunities.
- Supply chain realignment: Companies will focus on building resilient supply chains, potentially reducing dependence on China by diversifying manufacturing hubs.
- Global trade and tensions: US-China relations will continue to shape global trade policies. The decoupling of these economies could have far-reaching impacts, specially for export-driven countries.
PAGE: Would the Pakistani economy farewell in 2025 in terms of GDP growth, inflation, investment, employment opportunities, etc.?
Mohammad Shoaib: Pakistan economic outlook for 2025 depends heavily on internal reforms, political stability, and external factors such as global commodity prices and regional cooperation. Several factors will determine its performance:
GDP growth
Pakistan could achieve GDP growth in the range of 4-5% if structural reforms in taxation, governance, and energy are implemented effectively. Given 2.2% population growth rate, it is critical for the country to accelerate growth rate beyond 3.5 to at least 5%. Agriculture, manufacturing, and IT sectors will be key contributors:
- Agriculture: Modernization and better water management could increase productivity.
- Manufacturing: Investments under the China-Pakistan Economic Corridor (CPEC) in industrial zones and infrastructure could boost this sector.
- IT sector: Pakistan’s emerging tech industry, driven by a young and skilled workforce, holds significant growth potential if adequately supported. We have seen good growth in technology exports in 2024 and there is need to further focus on that area.
Inflation
Inflation is expected to remain under control in 2025, barring any spike in oil and food prices. The currency is expected to remain stable, given that current account deficit is under control and fiscal deficit will also be within manageable limits.
Investment
Domestic and foreign investment will be pivotal for Pakistan’s economic stability:
- CPEC projects: Continued infrastructure and energy investments can attract foreign direct investment (FDI) and boost economic activity.
- Ease of doing business: Simplifying regulatory processes and reducing corruption could make Pakistan more attractive to investors.
- Diaspora contributions: Engaging the Pakistani diaspora in investment initiatives through bonds or real estate opportunities could generate additional capital.
Employment opportunities
Pakistan’s employment landscape will depend on:
- Agriculture and rural development: Mechanization and value-added agriculture can create jobs.
- Youth employment: Skill development programs in IT and vocational training can harness the potential of Pakistan’s young workforce.
- Public works programmes: Infrastructure projects can generate short-term employment while building long-term assets.
PAGE: What could be the major challenges in 2025?
Mohammad Shoaib: Pakistan and the global economy will face numerous challenges in 2025. Some of these are universal, while others are unique to Pakistan’s socio-economic and political landscape.
Global challenges
- Geopolitical instability: Ongoing conflicts and tensions, such as the Russia-Ukraine war and US-China relations, could disrupt global trade and investment flows.
- Climate change: Rising temperatures, extreme weather events, and water scarcity will continue to threaten food security and economic stability worldwide.
- Energy crisis: Supply chain disruptions and fluctuating prices of oil and gas may lead to energy shortages, particularly in developing nations.
- Technological divide: Unequal access to technology and digital infrastructure could widen economic disparities between developed and developing countries.
Pakistan-specific challenges
- Debt servicing: High levels of external debt and a narrow tax base may constrain Pakistan’s fiscal space, limiting development spending.
- Water scarcity: Pakistan faces severe water shortages, which could impact agriculture and overall economic growth.
- Energy dependence: Over-reliance on imported fossil fuels exposes Pakistan to global price shocks.
- Security concerns: Regional tensions and internal security challenges may divert resources away from development initiatives.
Social challenges
- Population growth: A rapidly growing population will strain resources, education systems, and healthcare infrastructure.
- Education and health: Low literacy rates and inadequate healthcare services could hinder human capital development.
- Urbanization: Rapid urbanisation without proper planning could lead to housing shortages, traffic congestion, and environmental degradation.
PAGE: How do you see the energy situation in 2025?
Mohammad Shoaib: Energy will remain a critical issue globally and for Pakistan. While the transition to renewables is accelerating, traditional energy sources will still play a significant role.
Global energy landscape
- Renewable energy expansion: Solar, wind, and hydrogen energy projects will dominate new investments. Countries like China, the US, and Europe will lead in renewable energy adoption.
- Energy security: Governments will prioritise securing energy supplies through diversification and local production to mitigate geopolitical risks.
- Technology and innovation: Advances in energy storage (e.g., batteries) and efficiency will make renewables more competitive and accessible.
- Fossil fuels: Oil and gas will still account for a substantial share of global energy consumption, especially in developing nations, but their share will gradually decline.
Pakistan’s energy outlook
- Renewable energy projects: Pakistan has immense potential for solar and wind energy, particularly in regions like Sindh and Balochistan. If investments materialize, renewable energy could meet a significant portion of the country’s energy needs.
- CPEC energy initiatives: Ongoing power projects under CPEC, including coal, hydropower, and renewables, will enhance generation capacity. However, operational efficiency and financial viability remain concerns.
- Circular debt: Resolving the persistent issue of circular debt in the energy sector will be crucial to ensuring financial sustainability and preventing power outages.
- Energy efficiency: Implementing energy-saving technologies and practices could reduce consumption and costs.
- Nuclear energy: Expanding nuclear energy capacity could provide a stable and reliable power source.
Challenges in energy
- Reliance on imports: Pakistan’s dependence on imported LNG and crude oil makes it vulnerable to global price fluctuations.
- Infrastructure gaps: Aging transmission and distribution networks cause significant energy losses and inefficiencies.
- Affordability and access: Ensuring affordable energy for a growing population while maintaining financial sustainability will be a delicate balance.
Way forward
To ensure energy security in 2025 and beyond, Pakistan needs to:
- Promote renewable energy through policy incentives and public-private partnerships.
- Diversify energy sources to reduce dependency on imports.
- Invest in upgrading transmission and distribution infrastructure.
- Implement pricing reforms to reduce circular debt and improve sector performance.
- Enhance regional energy cooperation, such as importing electricity from Central Asia.
In conclusion, 2025 will be a pivotal year for the global and Pakistani economies. Opportunities abound, but realizing them requires proactive measures, particularly in addressing structural weaknesses, fostering innovation, and embracing sustainable practices. Success will depend on collaborative efforts across government, private sector, and international partnerships.