IN recent months, the economy has offered some welcome signs of stability: inflation has slowed sharply, reserves have climbed above $14bn, the current account is in surplus, and the fiscal deficit has been reined in.

These improvements — achieved mainly through IMF-prescribed austerity policies — have prompted global rating agencies to lift Pakistan’s sovereign rating, hinting at a restoration of market confidence in its economy. But the weaknesses are still obvious. Large-scale manufacturing shrank by 0.74pc last year, missing even the government’s modest growth target of 3.5pc.

This is not an isolated setback. Big industry has been stuck in a cycle of low growth or contraction for three years on the trot.........

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