KARACHI: As Pakistan moves toward the end of 2025, the country’s economy presents a picture of relative macroeconomic stability overshadowed by persistent difficulties for businesses and industry, according to the Pakistan Business Forum (PBF). Business leaders acknowledge improvement in key indicators but warn that without structural reforms, economic recovery may remain fragile. Chief Organiser of Pakistan Business Forum (PBF), Ahmad Jawad said the most visible improvement this year has been in Pakistan’s foreign exchange reserves, which have recovered significantly after reaching alarming lows in 2022. That year marked one of the most difficult periods for the economy, when reserves fell sharply and the US dollar surged against the Pakistani rupee, triggering inflation, import disruptions, and widespread uncertainty in the business community. “While reserves have now increased due to international support, improved remittance inflows, and tighter fiscal controls, the rupee continues to trade at historically high levels against the dollar”. According to PBF, this disconnects highlights unresolved structural weaknesses, as the high exchange rate continues to raise the cost of imports, production, and overall business operations. Similarly energy costs remain a central concern for industry. Despite some adjustments, electricity tariffs in Pakistan are still among the highest in the region. The expensive power has made Pakistani goods less competitive than those produced in neighbouring countries such as Bangladesh, India, and Sri Lanka, where industries benefit from relatively stable and affordable energy pricing. In Pakistan, high electricity costs have led to reduced production, idle capacity, and, in some cases, the relocation of businesses to more cost-effective markets. The overall cost of doing business has also continued to rise in 2025. Manufacturers and traders face high financing costs, regulatory hurdles, and logistical inefficiencies, making it difficult to plan long-term investments. Small and medium enterprises, in particular, are struggling to survive amid expensive credit and inconsistent economic policies. Business confidence, while improved from the crisis years, remains cautious. Jawad also said taxation is another area where the business community sees little relief. The tax system continues to rely heavily on indirect and withholding taxes, placing a disproportionate burden on already documented sectors. Compared with regional economies; that offer simpler and more predictable tax frameworks, as Pakistan continues to lag behind in attracting foreign direct investment with one of the factor of high taxation. He also brayed if we talking in a regional context, Pakistan’s challenges appear even more pronounced. Several neighbouring countries have adopted export-driven growth models, streamlined regulations, and business-friendly policies that have helped them integrate into global supply chains. Pakistan, according to PBF, risks falling further behind unless decisive reforms are undertaken. Looking ahead to 2026, the Pakistan Business Forum believes the government must shift focus from short-term stabilization to long-term economic growth. It stresses the need for sustainable reduction in electricity tariffs through deep energy sector reforms, rather than temporary measures. Simplifying the tax system, broadening the tax base, and ensuring policy consistency are seen as essential steps to restore investor confidence. PBF also calls for greater emphasis on export-oriented industrialization, reduced cost of financing, and stronger coordination between fiscal and monetary policies. While acknowledging the progress made in rebuilding foreign reserves and restoring a degree of stability, the Pakistan Business Forum cautions that these gains will mean little unless they translate into lower costs, higher competitiveness, and real relief for businesses. According to PBF, 2026 must be the year when Pakistan converts stabilization into sustainable growth, job creation, and industrial revival. Copyright Business Recorder, 2026