annashay 
In a recent global report, Pakistan was ranked 139th out of 139 countries in terms of the cost of living, placing it at the very bottom. According to the latest statistics, the average cost of living in Pakistan is extremely low when compared to other countries. For example, the U.S. Virgin Islands top the list at $98.4, followed by Switzerland at the same rate, and the United States at $74.9. Turkey stands at $34.7, China at $30.7, and India at $19.5. Bangladesh, ranked 133rd, has a cost of living of $20.9, still higher than Pakistan’s, which hovers below $20.
What is more surprising is Pakistan’s inflation rate. As of April 2025, inflation has dropped below 0.5 percent, the lowest level in nearly sixty years. In comparison, Switzerland’s inflation stands at 0.4 percent, India’s is 3.34 percent, and Bangladesh’s inflation is reported at a staggering 9.35 percent. On the surface, this might appear to be good news. Low inflation and a low cost of living would typically suggest a favorable economic environment, one where citizens can afford their daily needs and live a stable life. However, Pakistan presents a paradox: despite these seemingly positive indicators, widespread hardship and economic struggle persist.
The contradiction arises from the fact that while inflation and cost of living are low, income levels are even lower. Pakistan’s average wages are among the lowest in the region, and the country’s labor market is dominated by informal, low-paying jobs with minimal security. In urban and rural areas alike, many families survive on daily or seasonal earnings that barely cover food, let alone education, healthcare, housing, or transportation. This imbalance turns the low cost of living into a misleading statistic; it simply reflects that prices are low relative to other countries, not that they are affordable for the people living in Pakistan.
Unlike countries such as Switzerland and the United States, where high living costs are balanced by high wages and strong welfare systems, Pakistan lacks a similar safety net. Even in countries like India and Bangladesh, where inflation is higher, gradual increases in income and better-targeted subsidies help reduce the overall burden on the poor. But in Pakistan, wages have remained stagnant for years, and the public sector is unable to absorb the growing number of educated but unemployed youth. The unemployment rate continues to rise, and with over 65 percent of the population under the age of 30, this is a ticking time bomb for social unrest and instability.
Another key problem is the growing inequality in the country. Recent estimates suggest that the richest 10 percent of Pakistanis control over 60 percent of national wealth. Meanwhile, the bottom 40 percent of the population struggles to meet even their most basic needs. This divide is worsened by the fact that a significant portion of Pakistan’s workforce – nearly 70 percent – is employed in the informal economy, which remains largely unregulated and untaxed. These workers receive low wages, lack job security, and have no access to social protections such as pensions or health insurance. Consequently, they remain vulnerable to economic shocks and are excluded from many of the benefits that come with formal employment.
At the heart of Pakistan’s economic struggle lies a history of inconsistent, short-sighted policymaking. Governments, regardless of political affiliation, have repeatedly relied on short-term measures such as currency devaluation, foreign borrowing, and administrative price controls to manage economic pressures. While these policies may temporarily bring down inflation, they do little to address the underlying issues of low productivity, weak industrial capacity, and human capital underdevelopment. Over time, this has created an economy that is reactive rather than proactive, and fragile rather than resilient.
Monetary policy in Pakistan has often been guided by the sole objective of controlling inflation, without a broader vision for economic development. This focus has led to tight interest rates and conservative fiscal spending, which stifle private sector growth and limit public investment in critical sectors such as health, education, and infrastructure. Meanwhile, the country’s tax system remains narrow and regressive. Only about 1.5 million people out of a population of over 240 million pay income tax, and the government continues to rely heavily on indirect taxes like sales tax and excise duties, which disproportionately hurt the poor.
The agriculture sector, which employs over 35 percent of the labor force, has also been neglected. Despite its importance, it suffers from low productivity, poor irrigation, outdated farming techniques, and inadequate access to finance. Similarly, the manufacturing sector has failed to diversify beyond textiles and basic goods, making it vulnerable to external shocks and global demand fluctuations. Energy shortages, high electricity tariffs, and inconsistent power supply further hinder industrial growth and discourage both local and foreign investment.
Given these challenges, a low inflation rate alone cannot improve living standards unless accompanied by structural reforms that raise incomes and expand economic opportunities. What Pakistan needs is a comprehensive and inclusive economic strategy that targets the root causes of poverty and stagnation, rather than merely treating the symptoms.
This strategy should include: Investment in education and skills development to create a competitive workforce.Expansion of vocational and technical training programs tailored to market needs.Diversification of the industrial base to reduce reliance on agriculture and textiles.Support for small and medium enterprises through access to finance, regulatory simplification, and infrastructure.
Progressive tax reforms that widen the tax base without penalizing the poor. Modernization of the agriculture sector through innovation, mechanization, and efficient water use. Development of green and digital economies to generate jobs and attract foreign investment. Improved governance and transparency to rebuild public trust in institutions. Strengthening of social protection systems, including pensions, health insurance, and unemployment benefits.
Encouragement of domestic savings and investment through incentives and policy stability. Pakistan stands at a crossroads. The illusion of success created by low inflation cannot mask the widespread poverty, inequality, and despair felt by millions. Real change will come not from manipulating economic statistics but from empowering people through education, job creation, and equitable growth. Only then will the country move from economic paradox to economic promise – from low inflation and high hardship to a future of stability, opportunity, and dignity for all its citizens.
