PAKISTAN`S economic narrative has long been dominated by IMF programmes, balance-of-payments crises, and fiscal deficits. The latest IMF data, showing 23.4 per cent inflation and anaemic GDP growth of 2.4pc, reinforces this familiar story.

However, beneath these conventional metrics lies an unexplored transformation that could alter Pakistan`s economic trajectory.

The digital revolution sweeping across Pakistan`s urban landscape has created pockets of innovation despite macroeconomic headwinds. While IT-related exports remain modest relative to our $374.6 billion GDP, the digital ecosystem is addressing core economic challenges. In Karachi`s technology parks, start-ups are revolutionising supply chain management. Lahore`s software houses are exporting services.

Islamabad`s fintech companies are transforming into financial inclusion.

This transformation extends to traditional sectors. Agriculture, contributing 22pc to GDP, faces an existential threat from climate change, with projected yield declines of 8-10pc. Yet, precision agriculture powered by IoT sensors and data analytics offers hope. Local agritech initiatives are showing how digital solutions can optimise water usage, predict weather patterns, and enhance crop resilience.

The State Bank`s initiative with Raast exemplifies this potential for technological leapfrogging. Rather than replicating decades-old banking infrastructure, Pakistan is moving to advanced digital payment systems. This is not just about convenience; it is about bringing millions of unbanked citizens into the formal economy, expanding the tax base, and reducing the informal economy that has long hindered economic planning.

However, significant structural challenges persist. The current account deficit of $665 million, while improved, reflects deep-rooted external sector vulnerabilities. Digital services exports could help address this, requiring minimal physical import s while generating foreign exchange.

Yet, realising this potential demands addressing fundamental constraints.

Digital literacy remains concentrated in urban centres, creating a dangerous divide as the economy evolves. With unemployment at 8pc and a booming population of 236m, ensuring widespread digital inclusion becomes critical. The regulatory framework, designed for traditional industries, often hampers digital innovation.

When debt servicing consumes 60pc of revenues, finding resources for digital infrastructure seems daunting.

Pakistan`s demographic dividend could become a liability without urgent action.

Our young population, often seen as a chal-lenge, could drive digital transformation.

But this requires reimagining education, from primary schools to universities.

Technical training must evolve beyond traditional IT skills to embrace emerging technologies AI, blockchain, cloud computing.

The Securities and Exchange Commission`s regulatory sandbox represents a step forward, but comprehensive reform is needed. Tax policies must incentivise digital entrepreneurship. Banking regulations should facilitate digital financial services. Intellectual property rights must protect digital innovations.

Looking ahead, Pakistan needs coordinated action across multiple fronts. Digital infrastructure must extend beyond urban centres to secondary cities and rural areas.

Education systems must align with future workforce demands. Regulatory frameworks must balance innovation with stability. Government services must embrace digital transformation to improve efficiency and reduce corruption.Success requires moving beyond traditional economic metries. While managing inflation and external accounts remains crucial, building digital economy foundations offersa path to sustainable growth. The conventional toolkit of monetary and fiscal policies, while necessary, is not sufficient for this transformation.

The choice is not between addressing current economic challenges and preparing for a digital future, it is about recognising how digital transformation can help solve persistent economic problems.

Pakistan`s large youth population, growing smartphone penetration, and emerging start-up ecosystem provide the foundation.

What is needed is a comprehensive policy framework that leverages these advantages.

The path forward requires careful balancing of immediate stabilisation needs with long-term digital infrastructure investment. Traditional economic indicators tell only part of the story. In the digital economy, it is our ability to create an innovative, inclusive, and resilient economic future that works for all Pakistanis, not just the urban elite. • The wnter is a former ministerial adviser to the Saudi ministry of health and currently serves as assistant professor of finance and economics at Affaisal University in Riyadh.