ENERGY CONSTRAINTS AND MACROECONOMIC FRAGILITY IN EMERGING ECONOMIES: EVIDENCE FROM PAKISTAN

Abstract

Pakistan continues to face persistent macroeconomic fragility driven by structural bottlenecks, among which energy constraints remain a critical factor. This study examines the role of energy shortages in shaping inflation dynamics and economic growth in Pakistan. Using annual time series data from 1990 to 2023, the analysis employs the Autoregressive Distributed Lag (ARDL) approach to investigate both short-run and long-run relationships among the variables. The empirical results indicate that energy constraints significantly contribute to rising inflation while exerting a negative and persistent effect on real GDP growth in the long run. The findings suggest that energy shortages transmit macroeconomic instability through higher production costs, supply disruptions, and reduced industrial output, thereby intensifying overall economic fragility. The study concludes that strengthening energy infrastructure, improving supply efficiency, and diversifying the energy mix are essential policy measures to reduce macroeconomic vulnerability and support sustainable growth in Pakistan.Top of FormBottom of Form