Investigating the Impact of Energy Consumption on Economic Growth of Pakistan: An Econometric Analysis

Abstract

The growth of any economy depends on energy. The energy crises can affect economic growth through higher energy prices that lead to an increase in the cost of production, a decrease in consumer spending, and unemployment. Pakistan is facing serious fuel and electricity shortages in all key industries. The aim of the present study was to investigate the impact of energy use, such as petroleum, gas, coal, and electricity consumption, on Pakistan's economic growth by employing the ARDL model using secondary data from 1981 to 2021. Our results indicated that in the long run, the effect of oil consumption, coal consumption, natural gas consumption, and total population on economic growth was positive and significant, while electricity consumption had a negative effect. In the short term, the total population had a negative impact on economic growth. However, electricity, natural gas, coal, and petroleum had a positive impact on economic growth, and all these factors were statistically significant. Based on the findings of the study, it was suggested that policymakers should promote investment in renewable energy sources for sufficient and effective energy supply for sustainable economic growth.