27/04/2026
Press Release 26 April 2026
Nineteenth Annual Conference on Management of the Pakistan Economy, 8-9 April 2026
Moazam Mahmood, Azam Chaudhry and Matthew McCartney
Themes of external vulnerability, energy dependence, and growth dominated the two-day conference at the Lahore School of Economics. The conference occurred against the backdrop of an ongoing programme with the IMF and oil prices rising to $120 a barrel, at a time when Pakistan imports 80% of its energy needs.
The opening address was given by the Rector Dr. Shahid Amjad Chaudhry, who framed the conference in terms of three vulnerabilities faced by Pakistan, ongoing negotiations with the IMF from a position of weakness owing to recurrent and accumulated foreign debt, the shock to domestic costs and the import bill resulting from increased oil prices, and a longer-term reform agenda related to regulation, taxation, and investment.
The first panel on day one chaired by Dr. Ishrat Hussain former Governor of the the State Bank, focused on External Vulnerabilities and Growth.
The Modeling Lab at the Lahore School, Dr. Moazam Mahmood, Dr. Azam Chaudhry, Amna Noor Fatima, Anoosha Liaqat, and Syeda Khadijah Batool, estimated that pre conflict GDP growth for FY 2025-2026 could have been 3.2%, but the oil price shock would lower it to 1.8%. Inflation was forecast to reach 9.4%. The exchange rate after the precipititous depreciations of 2018 and 2022, remained remarkably resilient, despite pressure from an oil shocked deficit in the Current Account.
Dr Rashid Amjad the Director of the Graduate Institute for Development Studies at the Lahore School, argued that the surge in remittance income to Pakistan to $40 billion in 2025, while gratifying support on the Current Account, risked being spent more on imports, with a lower impact on the domestic economy.
Dean of Economics, Dr Azam Chadhry and Gul Andaman estimated that the GDP growth rate consistent with a sustainable balance of payments had shrunk over recent decades to 3.7%. The faster economic growth needed to reduce poverty and create employment could risk sucking in excessive imports and leading to another debt crisis.
Dr. Naved Hamid the Director for the Centre for Research in Economics and Business at the Lahore School, and Murtaza Syed from the Asian Infrastructure Investment Bank, explored a narrative of policy failure, the unwinding of trade liberalisation in the 2000s towards greater protection and increased complexity of the trade regime.
Dr. Rajah Rasiah Dean at the University of Malaya argued that a proactive industrial policy could help Pakistan pursue a goal of export-led industrialisation, building on existing successes in solar technology.
The second session examined structural change in Pakistan.
Dr. Ishrat Hussain catalogued a growing litany of economic failures in large-scale manufacturing, declining capabilities, the continued dominance of low-value-added textile exports for three decades, and a declining share of global export markets.
Dr. Kalim Hyder from the State Bank of Pakistan and Mehak Ejaz from the Institute of Business Management, traced the slowdown in manufacturing growth to declining investment, in turn driven by the high cost of domestic loan capital.
Dr. Rabia Ikram and Amna Kashif from the Lahore School used rigorous statistical analysis to show a step down in trend GDP growth, from 4% over 1992-2018, to 2.5% from 2018-2023. Again, the authors highlighted the crucial role of declining investment.
Shamyla Chaudry, Muzzna Maqsood, and Dr. Moazam Mahmood from the Lahore School, estimated that low savings in Pakistan, (and therefore low investment), was contributed to by mounting capital outflows of $6 billion to $9 billion per year. Arguing that depreciation of the exchange rate triggered these outflows because of declining relative domestic profitability.
Finally, Anum Ellahi from the Lahore School, completed the sectoral overview showing that falling sectoral growth had even spread to the agricultural sector, where both food crops (wheat) and industrial inputs (cotton) had experienced sharp falls in annual growth rates over the two years, possibly correlated to falling support prices.
The first panel on day two focused on regulatory policy and welfare.
Dr. Theresa Thompson Chaudhry Co Chair of the Innovation and Technology Centre at the Lahore School, collected data from 657 manufacturing firms in the Punjab using a Randomised Control Trial (RCT). The study showed that firms drastically undervalued potential cost savings from using solar technology – payback periods of under two years and potential savings in electricity use of 40-60 per cent. This information failure creates the potential to drastically scale up the number of firms that had installed solar technology by 2024 to 13 per cent. The study also found that firms' pessimistic attitudes were hard to shift.
Dr. Matthew McCartney from the ZRCP in Zanzibar, explored the political economy of economic reform and showed that stable, durable governments in Pakistan were better incentivised to provide poverty-reducing public goods and to conduct growth-promoting macroeconomic management.
The Modelling Lab at the Lahore School showed a disturbing recent trend in caloric poverty in Pakistan, which had consistently declined declined between 2000 and 2014, plateaued to 2018, but then reversed, increasing through to 2025.
Dr. Waqar Wadho from the Lahore School, examined the labour market in Pakistan, showing the low impact of rising education and skills, on the low productivity informal economy, seen in women’s low levels of labour force participation, and high unemployment levels even among degree holders.
Dr. Rabia Ariff and Dr. Azam Chaudhry from the Lahore School, explored Pakistan's positioning in global value chains (GVCs). They found that limited local value added, and short local GVCs, could be improved through higher labour productivity and institutions to deepen integration.
Dr. Mujtaba Piracha from the Government of Pakistan, and Nadia Mukhtar from LUMS, examined Pakistan's Export Development Fund (EDF) as a case study of export-oriented industrial policy. The paper showed why industrial policy is crucial for Pakistan – addressing market failures, the complexity of industrial policy – the different needs of large and small firms, and the importance of financing constraints for firms that could enter export markets.
Dr. Jamshed Uppal from the Catholic University of America, noted the importance of financial inclusion for empowerment and poverty reduction, but estimated that it will be another 52 years before 90% of Pakistan's population even has access to a bank account.
Finally, Dr. Matthew McCartney gave the Rapporteurs' Report, highlighting the themes of vulnerability and resilience of Pakistan, the impressive 19-year history of the Lahore School’s Economics Conference, and the importance of transformative changes such as Artificial Intelligence (AI), Urbanisation, and Climate Change as suitable subjects for future conferences to engage with.
Dr Shahid Chaudhry gave the final vote of thanks to staff, students, and visitors to the conference.
In summary, a forest-not-the-trees analysis of the conference papers is disturbing. It shows that there was looming crisis of GDP growth, sectoral growth, and resulting welfare loss, prior to the current oil shock. From 2018 onwards, trend GDP growth falls to 2.5%, based on a trend drop in investment. The large depreciations from 2018 seem to have triggered a significant increase in capital outflows, on account of reduced relative domestic profitability, depleting domestic savings. Sectorally, the larger drop in investment has been in manufacturing. But with a policy warning also for agriculture.
This large depreciations from 2018 onwards fuelling inflation, and the fall in trend GDP growth, have reversed the two decade long declining trend in poverty.
The good news is that the trigger for these declining macro trends, the falling exchange from 2018 onwards, appears to have stabilized. For which credit must go to GOP for getting it right. The worry is contra calls for further depreciation by various economic lobbies.
