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About a decade ago, a research report highlighted that much of the country’s economic woes centred around low savings and investment. Pakistan seemed to be in a low-savings-and-investment trap, wrote Amjad Ali, an analyst at the State Bank of Pakistan’s (SBP)Policy Review Department, in his staff notes in January 2016. That piece also included the input and views of two other researchers. He also pointed out that economic growth spurts are unsustainable, and low growth is generating fewer domestic savings.
As of May 2026, gross capital formation remains challenging as policymakers struggle to improve investment rates. Gross capital formation was around 12.94 per cent of GDP in 2024, generally reflecting a decline from higher levels in recent decades.
In August 2025, the State Bank of Pakistan Governor Jameel Ahmed had cautioned that despite improvements in key macroeconomic indicators, Pakistan continues to grapple with structural challenges, foremost among them the country’s persistent low domestic savings rate, having dropped to just 7.4pc of GDP (far below the regional average of 27pc). This created a chronic reliance on external financing and contributed to recurring economic boom and bust cycles. He called for deeper capital markets.
