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Analyzing the Role of Key Macroeconomic Indicators relating to Pakistan’s GDP Growth: A Time-Series Examination
Economic landscape of Pakistan is determined by an extremely complex interaction of domestic and global forces; navigating it successfully requires a clear understanding of its character. The paper explores the dynamic relationships between macroeconomic variables and GDP growth in Pakistan using the Autoregressive Distributed Lag (ARDL) model and other stability tests using time series data from 1980 to 2022. The analysis includes variables representing GDP per capita, inflation, imports, total debt as a percentage of GDP, total population, and forestry and agricultural output. The correlation matrix shows a positive association between GDP growth rate and GDP per capita, total debt service is inversely correlated with total population, and GDP demonstrates a significant negative correlation. The ARDL results indicate that GDP per capita and the agriculture and forestry sectors are significant drivers of economic growth. Over the period in question, inflation only marginally affected GDP growth showing how important it is to maintain price stability through effective policies. Imports provide short-term benefits by enhancing productivity through capital goods and technology inflows but they may pose long-term challenges due to trade imbalances. The influence of population growth appears to be ambivalent: in the short term it contributes to economic growth by increasing labor supply and consumption; in the long term, however, its effect may become detrimental owing to resource constraints. Public debt shows little influence in the short term but negatively impacts growth over time by increasing the fiscal burden of debt servicing. These findings suggest that to achieve long-term economic stability and growth, the country needs targeted policy interventions that should help it control inflation, manage the debt sustainably, optimize imports, and invest in agriculture, which is an important determinant of GDP growth. Future research should concentrate on sector-specific studies and the effects of political stability on economic growth in order to provide deeper insights contributing to Pakistan’s sustainable economic development.