Karachi’s Untapped Potential: Why Pakistan’s Economic Powerhouse Still Awaits Its Future

Karachi, Pakistan’s economic backbone and largest city, drives national growth through trade, youth, and enterprise, yet continues to struggle with underinvestment, fragmented governance, and an uncertain long-term development vision.

WEBDESK – MediaBites – December 22, 2025

Pakistan’s largest city is often described as its economic lifeline, yet it remains one of its most neglected. Karachi, home to an estimated 22–25 million people, is the country’s primary engine of growth, contributing around 20–25% of Pakistan’s GDP, generating more than 60% of federal revenue, and handling over 90% of national trade through its ports. Despite this outsized role, the city continues to struggle with inadequate planning, weak infrastructure, and fragmented governance.

Karachi is not just large, it is young. A significant portion of its population is under the age of 30, making it one of the most demographically dynamic cities in South Asia. This youth bulge represents an enormous advantage, a workforce full of ambition, adaptability, and entrepreneurial drive. Even in the absence of strong institutional support, this energy has fueled startups, informal enterprises, creative industries, and digital services, allowing the city to reinvent itself repeatedly.

A city of diversity and resilience

Few cities in the region match Karachi’s ethnic, linguistic, and cultural diversity. Sindhis, Muhajirs, Pashtuns, Baloch, Punjabis, and communities from across South Asia live and work side by side. This diversity has often produced friction, but it has also created an unmatched level of resilience and creativity. Karachi absorbs economic shocks, political unrest, and security challenges, yet continues to function, trade, and produce.

That resilience, however, has come at a cost. The city’s ability to “survive” has often been mistaken for an ability to thrive without support.

Political complexity, chronic gridlock

Karachi’s progress is routinely stalled by overlapping jurisdictions and competing power centers. Authority is split between federal, provincial, and local institutions, with no single entity fully empowered to plan or execute long-term development. As a result, projects related to transport, water, housing, and urban services frequently face delays, duplication, or abandonment.

This governance paralysis has real consequences. While Karachi generates the bulk of Pakistan’s economic output, its annual development allocations remain disproportionately low. In recent years, estimates suggest that less than 30% of Sindh’s development budget has been consistently directed toward Karachi, a figure many economists argue falls far short of the city’s needs and contributions.

Business potential that cannot be ignored

From a business and investment perspective, Karachi should be impossible to overlook. It is already the country’s manufacturing and financial hub, home to the Pakistan Stock Exchange, major banks, industrial zones, and two strategic seaports. The city’s growing economic engagement with China, through trade, logistics, and industrial collaboration, highlights what focused investment can achieve.

Yet Karachi’s potential extends far beyond ports and factories. With the right policies, it could become a regional center for technology, creative industries, fintech, logistics services, and urban innovation, leveraging both its population scale and entrepreneurial culture.

A city that gives more than it gets

Karachi is not short on talent, demand, or opportunity. What it lacks is consistent attention, coordinated leadership, and long-term vision. The paradox is stark: the city that contributes the most to Pakistan’s economy is often expected to survive on the least public investment.

And still, Karachi shows up every day.

The question facing policymakers is no longer whether Karachi matters. It always has. The real question is whether Pakistan is finally ready to plan for Karachi’s future, not just rely on its endurance.

Because if Karachi is given governance that matches its scale and ambition, it will not just sustain Pakistan’s economy, it could redefine it.

The AI-generated image is used only to illustrate Karachi’s urban development challenges.