Islamabad (GNP): President and CEO of the Bank of Punjab, Zafar Masud, argued that Pakistan’s current official GDP growth numbers fail to totally capture how ordinary citizens are actually coping with contemporary economic issues.
He suggested a roadmap calling for working towards a “Welfare GDP” measure, saying it does require a smarter pooling of existing indicators, including GNDI, per capita growth, the relationship between income and production, and distribution-weighted growth.
Zafar Masud delivered a lecture at Islamabad Policy Research Institute (IPRI) on Thursday, titled “Measuring Welfare-GDP Beyond Arithmetic”. In his articulate discourse, he posed a question: “if Pakistan’s economy is growing at 3.7%, why does that growth not register at the household level?
The veteran banker and corporate guru laid out his case using five years of data, spanning FY2020-21 to FY2024-25. He showed that, during the five years, the headline GDP grew 18.8%. However, once population growth was factored in, the GDP growth fell to 9.6%, and once he adjusted for how income is actually distributed and what price the poor pay for food and fuel, the bottom 40% of households, the poor decile were found to be 3.0% worse off overall.
Zafar Masud also said that the wealthiest segment of the population captured cumulative welfare gains of 9.9%. Even remittances, which add roughly $42 billion a year that headline GDP does not count, only pushed growth up to 13.1%, still leaving Pakistan’s poorest no better off than they were five years ago. He also cited labour market strains, including a dependency ratio of four people relying on a single income earner, and a labour force participation rate of only 45%.
Drawing comparisons with Argentina, Greece and Sri Lanka that faced steeper crises than Pakistan’s, but succeeded in steadily bringing down inflation, he argued that there is a reason for cautious optimism.
He pointed out the UK, the US, and Sweden as examples of nations whose prosperity was not built overnight, but through what he termed as an “anchored compact”: credible rules that lower the cost of capital and, over time, lift living standards broadly.
His smartest connotation was, “Stability is visible, and welfare is not.” He said that he is not opposed to macroeconomic stability, but is critical of the way consecutive governments have blindly adapted to lenders’ prescription.
He was critical of the IMF’s continued emphasis on stability over growth, suggesting that as long as Pakistan operates within that framework alone, sustainable economic transformation will remain out of reach.
He outlined five reforms that he believes can reset the trajectory. They are: moving out of the stabilisation trap through honest fiscal accounting, redirecting capital toward high-return sectors such as agriculture, SMEs and capital markets, competing globally on productivity, and ensuring long-term policy predictability for investors and citizens, alike.
Weaving literature into economic argument, the versatile Zafar Masud invoked the poetry of Mirza Ghalib, Ahmad Faraz, Jaun Alia, Dr Iqbal and Ibn-e-Insha to underscore his themes of equal distribution of resources, a just society and equal opportunities for all.
He said that “institutions are how a nation keeps its promises to people it has not met yet.”
Zafar Masud underscored the need for wealth generation, and growth on a horizontal trajectory and not one that is vertical. He was of the view that the whole society is infected with elite capture at one level or the other, and could prove to be worrisome if economic injustices prevail on.
He called for a focus on policies that truly lift the welfare of the population, stressing the importance of inclusivity in economic growth, especially in job creation and fair wages.
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He said that Pakistan’s headline GDP growth masks a severe decline in household welfare, necessitating a shift towards measuring “welfare-adjusted growth” via distribution-weighted disposable income. He also said that macroeconomic figures are misleading if they fail to account for how inflation and economic shocks have eroded purchasing power for the average citizen.
Sohail Majeed is a Special Correspondent at The Diplomatic Insight. He has twelve plus years of experience in journalism & reporting. He covers International Affairs, Diplomacy, UN, Sports, Climate Change, Economy, Technology, and Health.
