Economic red flags suggest that 2026 may prove yet another challenging year for Pakistan’s middle class and poor households, marked by rising living costs, job anxieties, and aspirations that continue to outpace opportunities. For businesses, mounting pressure to adapt to rule-based management and rapidly shifting market dynamics makes the year ahead highly uncertain. Persistent political instability, entrenched resistance to reforms that threaten elite privileges and immunity, low-grade insurgency in border regions, climate-related disaster risks, and the enduring spectre of terrorism severely constrain decisive economic actions. These domestic constraints are further compounded by global uncertainty. Fiscal resource management under the IMF watch has translated into a crushing burden on compliant taxpayers through higher rates, while cuts in relief and development spending have hurt public welfare. At the same time, the cost of running the government has continued to rise unchecked. The government must exercise caution in its policy choices, ensuring that short-term growth ambition does not undermine long-term economic stability, social equity and institutional resilience These policies have suppressed savings and investment, undermining growth. With GDP expanding by 3.2 per cent, barely matching the population growth, economic gains are effectively neutralised, resulting in rising poverty, unemployment, and mounting social stress. Much like earlier PML-N governments, Prime Minister Shehbaz’s administration appears inclined to accommodate business interests on the assumption that growth benefits will naturally trickle down to the broader population. However, Pakistan’s own history underscores this reality: periods of relatively high growth under General Ayub, Zia and Musharraf were accompanied by widening income and wealth disparities, while the gains proved short-lived and left the economy more fragile and society fractured. The Shehbaz government must, therefore, exercise greater caution in its policy choices, ensuring that short-term growth ambition does not undermine long-term economic stability, social equity and institutional resilience. Nobel laureate economist and professor Dr Joseph Stiglitz has consistently argued that progress is inseparable from greater equity. Both individuals and firms must embrace cooperation, ethical norms, and trust that markets function well only within strong government frameworks that promote fairness and shared prosperity. For businesses, this translates into investing responsibly in a resilient, productive capacity, adopting long-term strategies and accounting for broader social and environmental impact. For individuals, it requires an awareness of how power structures shape opportunity, dignity and economic outcomes, and an active role in advocating policies. Analysts argue that expecting meaningful government-led relief under Pakistan’s current economic constraints may be unrealistic. Households and firms, therefore, would be better served by focusing on strengthening their own resilience, leveraging internal efficiencies, skills and adaptive strategies, to navigate the economic challenges ahead. Dr Khaqan Najeeb, former economic advisor to the Ministry of Finance, argues that in 2026, financial resilience will depend less on policy relief and more on fiscal discipline. He advises households to prioritise regular savings, limit consumer borrowing, diversify income sources, and invest in skills that hold value in an inflation-prone economy. “For businesses and industry, he believes resilience will come from disciplined cash-flow management, prudent pricing, lower leverage, and a relentless focus on cost control and productivity. This includes improving energy efficiency, strengthening supply chains, and leveraging AI and digital tools to streamline operations. Firms that remain lean, adaptable, and risk-aware, he notes, will be best positioned to navigate persistent volatility and uncertainty. Nasim Beg, a prominent business executive, also emphasises restraint in consumption for individuals and competitiveness as a central priority for firms. He argues that households are best served by maximising savings and allocating investments prudently, with a significant share in debt mutual funds (income and money market funds), some directed toward retirement planning through voluntary pension schemes, and a portion in equity funds. The appropriate mix, he remarks, should vary by age, risk appetite, and financial goals. For businesses, Mr Beg stresses that long-term viability will depend on strengthening competitiveness, particularly by focusing on export-oriented activities and import-substitution opportunities. In a constrained macro-economic environment, he believes that firms that align their strategies with foreign exchange generation, efficiency and market diversification will be better placed to withstand volatility and sustain growth. Majyd Aziz, President, Employers Federation of Pakistan (EFP), expects economic stability and sustainability to improve in 2026 despite recent shocks. Reflecting on a turbulent 2025 marked by floods, regional conflict, political instability, terrorism and painful economic restructuring, he believes the outlook is cautiously positive. Mr Aziz stresses that households and businesses must shoulder primary responsibility for navigating ongoing pressures. He notes that EFP has been sensitizing employers and workers, representing nearly three million people, to tighten belts, avoid wasteful spending, and use resources more efficiently, particularly to protect more vulnerable groups. For businesses, especially those facing closures, high energy costs, and productivity losses, he advises sharper cost discipline through just-in-time inventories, workforce mentoring, digitisation, renewable energy adoption and waste reduction. For citizens grappling with inflation and job insecurity, he urges collective, community-based coping mechanisms, disciplined consumption, and stronger engagement with elective representatives rather than passive endurance. Published in Dawn, The Business and Finance Weekly, January 5th, 2026