Navigating Turmoil: The Impact of Political Instability on Pakistan's Economic Growth

Abstract

This study investigates the impact of political instability on economic growth in Pakistan between June 2020 and June 2024. Pakistan has faced significant political upheavals, including frequent government changes, social unrest, and military influence, creating an environment of uncertainty that affects economic performance. The research focuses on key economic indicators, such as GDP growth, inflation, unemployment, and foreign direct investment (FDI), to explore the relationship between political instability and these variables. A descriptive and correlational approach is used, relying on secondary data from credible sources, including the World Bank, IMF, and Pakistan's Ministry of Finance. The findings indicate a negative correlation between political instability and GDP growth, suggesting that higher instability leads to lower economic performance. Inflation and unemployment rates tend to rise during periods of instability, while FDI decreases. Regression analysis confirms that political instability significantly predicts lower GDP growth, higher inflation, and reduced FDI. The results highlight the critical role of political stability in fostering economic growth, attracting investment, and improving social welfare. The study provides valuable insights for policymakers, emphasizing the need for political continuity to enhance economic prospects in Pakistan.