Pakistan: Economic and Political Overview
In this page: Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline
Pakistan has achieved steady growth since 2013 in the aftermath of a credit facility agreement with the IMF. Economic growth slowed in recent years due to measures taken by the authorities to address macroeconomic imbalances and turned negative in the aftermath of the COVID-19 pandemic. According to the IMF's estimates, growth picked up in 2022 reaching 6% of GDP, but it turned negative again in 2023 (-0.5%), due to the efforts to stabilize the economy through tackling fiscal and external imbalances and to a contraction in private consumption caused by the loss of income of rural populations amid floods that devastated the agricultural sector and by rising inflation. The IMF has revised down Pakistan's growth estimate for fiscal year 2024 to 2%, followed by 3.5% in 2025.
Concerning public finances, Fitch Ratings anticipates that the consolidated general government fiscal deficit will decrease to 6.8% of GDP in FY24, down from an estimated 7.8% in FY23. This improvement is fueled by a shift in the primary balance to a surplus of 0.3% of GDP, compared to a primary deficit of 0.8% of GDP in FY23. The fiscal balance is being bolstered by factors such as inflation, new revenue measures, and enhanced discipline concerning tax exemptions, subsidies, and other expenditures, including those at the provincial level. The public debt-to-GDP ratio stood at 76.6% in 2023 and should decrease marginally this year (72.2%) and in 2025 (70.4% - IMF). Overall, Pakistan's debt dynamics remain stable due to robust nominal growth over the medium term, wherein high inflation acts to counterbalance the strain from elevated domestic interest costs. Pakistan experienced its highest-ever inflation in 2023, estimated at 29.2%. It should remain high over the forecast horizon (around 23.6% in 2024 and 12.2% the following year), as per the IMF. In July 2023, the IMF disbursed USD 1.2 billion, followed by an additional USD 700 million after the approval of a staff-level agreement in January 2024. This leaves USD 1.1 billion to be disbursed pending a review scheduled for March 2024.
Pakistan's unemployment rate stood increased to 8.5% in 2023 (from 6.2% the previous year) and is expected to decrease to 8% and 7.5% in 2024 and 2025, respectively. Nevertheless, the number of people no longer actively seeking work is increasing. The level of underemployment remains very high, and much of the economy is informal. While the poverty rate has fallen by 40% over the last two decades, it is still high: using the lower-middle-income poverty rate of USD 3.65 per day, in fact, the World Bank calculated that Pakistan's poverty ratio stands at around 39.4%, with over 12.5 million Pakistanis falling below the poverty line in one year. The country has a low GDP per capita (PPP), estimated at USD 6,437 in 2022 by the World Bank (latest data available).
| Main Indicators | 2022 | 2023 (E) | 2024 (E) | 2025 (E) | 2026 (E) |
|---|---|---|---|---|---|
| GDP (billions USD) | 374.75 | 338.24 | 0.00 | 0.00 | 0.00 |
| GDP (Constant Prices, Annual % Change) | 6.2 | -0.2 | 2.0 | 3.5 | 4.5 |
| GDP per Capita (USD) | 1,651 | 1,461 | 0 | 0 | 0 |
| General Government Gross Debt (in % of GDP) | 76.2 | 77.1 | 71.8 | 69.6 | 68.4 |
| Inflation Rate (%) | 12.1 | 29.2 | 24.8 | 12.7 | 7.6 |
| Unemployment Rate (% of the Labour Force) | 6.2 | 8.5 | 8.0 | 7.5 | 6.5 |
| Current Account (billions USD) | -17.48 | -2.24 | 0.00 | 0.00 | 0.00 |
| Current Account (in % of GDP) | -4.7 | -0.7 | -1.1 | -1.2 | -1.2 |
Source: IMF – World Economic Outlook Database , Latest available data
Note: (e) Estimated Data
The agricultural sector is very important for the Pakistani economy: it contributes 22.4% of the GDP and employs 36% of the active population, being the largest source of foreign exchange earnings. Wheat, rice, cotton, sugarcane, fruits, vegetables, and tobacco are among the major crops. Cattle livestock farming remains important as the country is among the top 10 beef and veal producers in the world. Pakistan is the fifth-largest cotton producer globally and has abundant natural resources, mainly copper, oil, and gas. According to the Ministry of Finance, the growth in the agriculture sector reached 2.25% in FY 2022/23.
The industrial sector contributes 18.8% of the GDP and employs 26% of the population. The major industries are textile production (the largest source of foreign exchange revenue), oil refining, metal processing, and the production of cement and fertilizers. Maritime transport is also a significant activity; however, the market is dominated by foreign shipping companies and the state-owned Pakistan National Shipping Corporation (PNSC). The manufacturing sector accounts for 12.4% of GDP, with large-scale manufacturing accounting for three-quarters of the total. During fiscal year 2021-22, the industrial sector declined by 3.76% due to drops in large-scale manufacturing (-9.87%) and construction (-9.16% - Ministry of Finance).
The tertiary sector comprises 52.2% of the GDP and employs more than one-third of the workforce (38%). The IT sector is growing rapidly, contributing around 1% of GDP and accounting for 3.5% of exports. During FY 2022/23, the services sector posted a growth of only 0.07% on account of mixed results in its subsectors: transportation and storage (+3.27%), information & communication (-2.55%), finance & insurance (-8.09%), public administration and social security (-8.99%), and education (9.94%). In the revised estimates, wholesale and retail trade slightly improved to -4.01%, whereas human health and social work improved to 10.57% (Ministry of Finance).
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
|---|---|---|---|
| Employment By Sector (in % of Total Employment) | 37.5 | 25.2 | 37.3 |
| Value Added (in % of GDP) | 22.3 | 19.8 | 51.5 |
| Value Added (Annual % Change) | 4.4 | 7.2 | 6.2 |
Source: World Bank - Latest available data.
Find more information about your business sector on our service Market Reports.
| Monetary Indicators | 2016 | 2017 | 2018 | 2019 | 2020 |
|---|---|---|---|---|---|
| Pakistani Rupee (PKR) - Average Annual Exchange Rate For 1 MUR | 2.95 | 3.06 | 3.59 | 3.85 | 4.02 |
Source: World Bank - Latest available data.
Find out all the exchange rates daily on our service Currency Converter.
The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.
Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation
The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.
Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024
See the country risk analysis provided by Coface.
Despite economic and political difficulties, Pakistan has taken steps to liberalize its trade and investment framework as part of commitments made with the WTO, IMF, and the World Bank. Nevertheless, the share of foreign trade in Pakistan's GDP continues to be low, at 33% (World Bank, latest data available). Textile products account by far for the largest share of exports (around 60%, mostly comprising linen, clothing, and cotton, making the country the 7th textile exporter in the world), followed by rice (3.32 million tons between July 2023-January 2024). In regards to imports, the largest items are petroleum products, palm oil, telephones, and coal (Comtrade).
The United States is the top destination for Pakistani exports (20.1%, mainly textile), ahead of China (8.2%), the United Kingdom (6.5%), the Netherlands (5.8%), and Germany (5.7%). Conversely, China is by far the largest supplier of goods to Pakistan (23%), followed by the United Arab Emirates (11.2%), Saudi Arabia (7.2%), Indonesia (7%), Qatar (5.8%), and the United States (4.4% - data Comtrade).
Pakistan's trade structure has been structurally in deficit and has been worsening in recent years: in 2022, imports of goods stood at USD 71 billion (-1.9% year-on-year), while exports grew 9.2%, totaling USD 30.9 billion. Concerning the trade of services, imports reached USD 10.5 billion, whereas exports amounted to USD 7.3 billion. For the same year, the World Bank estimated the country’s trade deficit at 12% of GDP (from 8.9% one year earlier). According to preliminary figures from the Pakistan Bureau of Statistics, the cumulative trade deficit for the first five months of the fiscal year 2023-24 (July-November) amounted to USD 9.45 billion, reflecting a 17.01% decrease in dollar terms compared to the same period the previous year. During the same period, cumulative exports totaled USD 12.17 billion, indicating a 1.9% increase, while cumulative imports totaled USD 21.6 billion (-17%).
| Foreign Trade Indicators | 2019 | 2020 | 2021 | 2022 | 2023 |
|---|---|---|---|---|---|
| Imports of Goods (million USD) | 50,332 | 45,837 | 72,489 | 70,781 | 50,500 |
| Exports of Goods (million USD) | 23,329 | 21,979 | 28,319 | 30,901 | 28,488 |
| Imports of Services (million USD) | 10,295 | 7,985 | 10,587 | 10,730 | 9,601 |
| Exports of Services (million USD) | 5,870 | 5,392 | 6,544 | 7,494 | 7,499 |
| Imports of Goods and Services (Annual % Change) | 7.6 | -5.1 | 14.5 | 15.6 | n/a |
| Exports of Goods and Services (Annual % Change) | 13.2 | 1.5 | 6.5 | 8.4 | n/a |
| Imports of Goods and Services (in % of GDP) | 19.5 | 17.4 | 18.0 | 21.9 | n/a |
| Exports of Goods and Services (in % of GDP) | 9.4 | 9.3 | 9.1 | 10.5 | n/a |
| Trade Balance (million USD) | -22,881 | -22,172 | -36,859 | -34,266 | n/a |
| Trade Balance (Including Service) (million USD) | -27,306 | -24,765 | -40,902 | -37,416 | n/a |
| Foreign Trade (in % of GDP) | 28.9 | 26.7 | 27.1 | 32.3 | n/a |
Source: WTO – World Trade Organisation ; World Bank , Latest Available Data
| Main Customers (% of Exports) |
2023 |
|---|---|
| United States | 17.4% |
| China | 9.5% |
| United Kingdom | 6.9% |
| Germany | 5.3% |
| Netherlands | 5.0% |
| See More Countries | 55.9% |
| Main Suppliers (% of Imports) |
2023 |
|---|---|
| China | 23.4% |
| United Arab Emirates | 9.6% |
| Saudi Arabia | 8.9% |
| Indonesia | 7.0% |
| Qatar | 6.6% |
| See More Countries | 44.4% |
Source: Comtrade, Latest Available Data
Source: Comtrade, Latest Available Data
To go further, check out our service Import-Export Flows.
Source: United Nations Statistics Division, Latest Available Data
- Pakistan Muslim League (Nawaz PML-N): centre-right, conservative liberal
- Pakistan Peoples Party (PPP): a mainstream political party derived out of the Pakistan People's Party
- Sunni Ittehad Council (SIC): right-wing, a political alliance of Islamic political and Barelvi religious parties
- Pakistan Muslim League (PMLQ): centre-right
- Pakistan Tehreek-e-Insaf (PTI): centre-left
- Muttahida Qaumi Movement (MQM): self-proclaimed liberal
- Muttahida Majlis-e-Amal (MMA): far-right
- Jamiat Ulama-e-Islam (JUI-F): far-right
- Jamaat-e Islami Pakistan(JI): far-right
- Awami National Party (ANP): democratic socialism
- Pak Sarzameen Party (PSP)
- Awami Workers Party (AWP): left-wing
- Tehreek-e-Labbaik Pakistan (TLP): far right.
The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).
The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.
Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House
Any Comment About This Content? Report It to Us.
© eexpand, All Rights Reserved.
Latest Update: May 2024
