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. However, 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. Pakistan faced an economic crisis at the start of FY24, with debt default risks, political instability, and inflationary pressures. Import controls and capital outflow measures disrupted supply chains. Since then, the situation has improved. The IMF Stand-By Arrangement in July 2023 restored exchange rate flexibility, relaxed import controls, and introduced fiscal measures. Political uncertainty eased, and strong agricultural growth helped the economy recover. After contracting by 0.2% y-o-y in FY23, real GDP growth at factor cost rose to 2.4% in FY24. The recovery is expected to continue, with growth projected at 2.8% in FY25, supported by imported inputs, easing supply chain disruptions, and lower inflation. However, growth will remain below potential due to tight macroeconomic policy, high inflation, and ongoing policy uncertainty (World Bank data).
Concerning public finances, the fiscal deficit narrowed by 0.9 percentage points to 6.8% of GDP in FY24 due to fiscal tightening. Higher direct taxes and petroleum development levy hikes increased revenues, surpassing non-interest expenditures and resulting in a primary surplus of 0.9% of GDP. However, rising interest spending crowded out public investment. While social protection spending grew, development expenditures declined, weakening social services and delaying progress on reducing high stunting and learning poverty rates. As per the World Bank forecast, the fiscal deficit is projected to rise to 7.6% of GDP in FY25 due to higher interest payments, but it is expected to gradually decrease with fiscal tightening and lower interest payments. Pakistan's debt-to-GDP ratio has dropped to its lowest in over six years, reaching 65.7% as of September 2024. The State Bank of Pakistan (SBP) reported that the total public debt of the federal government stood at Rs. 69.570 trillion in September 2024. This decrease signals a positive shift in Pakistan’s fiscal health as the country works to manage public finances and reduce dependence on external borrowing. Headline inflation slowed to an average of 23.4% in FY24, down from 29.2% in FY23, driven by high base effects, currency appreciation, and slower food inflation. With continued high base effects and lower commodity prices, inflation is expected to ease to 11.1% in FY25, though it will remain elevated due to higher domestic energy prices, expansionary open market operations, and new taxation measures.
Pakistan's unemployment rate is 6.3%, with 4.51 million unemployed, as per the Economic Survey 2023-24. The labour force totals 71.76 million, with 48.5 million in rural areas and 23.2 million in urban areas. Of the 67.25 million employed, 45.7 million are rural and 21.5 million are urban workers. Youth unemployment is highest at 11.1%, with 10.0% for males and 14.4% for females. The 25-34 age group has a 7.3% unemployment rate, with 5.4% for males and 13.3% for females. Female unemployment is notably higher, especially among youth. 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 stood at around 40.5% at the end of FY24. The country has a low GDP per capita (PPP), estimated at USD 6,715 in 2024 by the IMF.
| Main Indicators | 2024 (E) | 2025 (E) | 2026 (E) | 2027 (E) | 2028 (E) |
|---|---|---|---|---|---|
| GDP (billions USD) | 373.08 | 0.00 | 0.00 | 0.00 | 0.00 |
| GDP (Constant Prices, Annual % Change) | 2.5 | 2.6 | 3.6 | 4.1 | 4.5 |
| GDP per Capita (USD) | 1,581 | 0 | 0 | 0 | 0 |
| General Government Gross Debt (in % of GDP) | 70.1 | 73.6 | 71.9 | 70.0 | 67.0 |
| Inflation Rate (%) | 23.4 | 5.1 | 7.7 | 6.5 | 6.5 |
| Unemployment Rate (% of the Labour Force) | 8.3 | 8.0 | 7.5 | 6.8 | 6.0 |
| Current Account (billions USD) | -1.70 | 0.00 | 0.00 | 0.00 | 0.00 |
| Current Account (in % of GDP) | -0.5 | -0.1 | -0.4 | -0.5 | -0.8 |
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 23.3% of the GDP and employs 36.1% 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 sixth-largest cotton producer globally and has abundant natural resources, mainly copper, oil, and gas. According to figures from the Ministry of Finance, Pakistan's agriculture sector grew by 6.25% in 2023-24. Crop production surged by 11.03%, while livestock grew steadily at 3.89%. Forestry slowed to 3.05% from 16.63% the previous year, and fishing saw a modest 0.81% increase.
The industrial sector contributes 20.7% of the GDP and employs 25.6% of the population. The major industries are textile production, oil refining, metal processing, and the production of cement and fertilizers. Pakistan's textile and apparel industry is the largest sector, contributing 65% of merchandise exports and employing 45% of the labour force. Cotton and cotton-based products account for 61% of export earnings (PRGMEA). 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 14% of GDP, with large-scale manufacturing accounting for three-quarters of the total. Pakistan's industrial sector grew by 1.21% in FY 2024, recovering from a 3.74% contraction the previous year (data Ministry of Finance).
The tertiary sector comprises 50.8% of the GDP and employs more than one-third of the workforce (38.3%). The main subsectors are wholesale & retail trade (30.8% of total services and 17.8% of GDP in FY 2024), transport & storage (18.2% and 10.5%, respectively), and real estate (10.1% and 5.8%). As per the Ministry of Finance, the services sector grew by 1.2% in FY 2024, driven by gains in education, health, social work, and other private services. In FY 2024, the wholesale & retail trade sector grew by 0.32%, recovering from previous losses due to low agriculture and manufacturing output, with increased crop production as a key contributor. Transport and storage rose by 1.19%, driven by growth in railways (9.73%) and water transport (8.01%), while road transport grew by 1.15%, despite challenges in the automobile sector. Air transport declined by 6.44% due to a high deflator. The information and communication sector contracted by 3.02%, mainly due to lower telecom revenues and a higher deflator. The finance and insurance sector remained negative, affected by a high deflator and lower insurance output. Public administration and social security saw a decline of 5.25%. Education grew by 10.30%, while human health & social work activities increased by 6.80%. Other private services rose by 3.58%, with strong performance in professional and technical services.
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
|---|---|---|---|
| Employment By Sector (in % of Total Employment) | 36.1 | 25.6 | 38.3 |
| Value Added (in % of GDP) | 23.7 | 20.2 | 50.7 |
| Value Added (Annual % Change) | 6.4 | -1.2 | 2.3 |
Source: World Bank - Latest available data.
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| Monetary Indicators | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Pakistani Rupee (PKR) - Average Annual Exchange Rate For 1 MUR | 4.11 | 3.91 | 4.64 | 6.19 | 6.00 |
Source: World Bank - Latest available data.
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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
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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 29% (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 (around 6 million tons exported in FY 2024). In regards to imports, the largest items are petroleum oils and gases, palm oil, telephones, and coal (Comtrade).
The United States is the top destination for Pakistani exports (17.4% in 2023, mainly textile), ahead of China (9.5%), the United Kingdom (6.9%), Germany (5.3%), and the Netherlands (5%). Conversely, China is by far the largest supplier of goods to Pakistan (23.4%), followed by the United Arab Emirates (9.6%), Saudi Arabia (8.9%), Indonesia (7%), Qatar (6.6%), and Kuwait (3.8% - data Comtrade).
Pakistan's trade structure has been structurally in deficit and has been worsening in recent years: in 2023, imports of goods dropped by 28.6% to USD 50.5 billion, while exports lost 7.8%, totalling USD 28.5 billion. Concerning the trade of services, imports reached USD 9.6 billion, whereas exports amounted to USD 7.5 billion. For the same year, the World Bank estimated the country’s trade deficit at 7.6% of GDP (from 12% one year earlier). According to preliminary figures from the Pakistan Bureau of Statistics, exports rose by 10.52% in the first half of FY 2024-25, reaching USD 16.561 billion, compared to USD 14.985 billion in the same period last year. Imports increased by 6.11%, growing from USD 26.137 billion to USD 27.733 billion during the same period.
| Foreign Trade Indicators | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Imports of Goods (million USD) | 45,837 | 72,489 | 70,781 | 50,128 | 56,468 |
| Exports of Goods (million USD) | 21,979 | 28,319 | 30,901 | 28,470 | 32,321 |
| Imports of Services (million USD) | 7,640 | 10,120 | 10,302 | 9,359 | 10,542 |
| Exports of Services (million USD) | 4,415 | 5,513 | 6,377 | 6,279 | 7,046 |
| Imports of Goods and Services (Annual % Change) | -5.1 | 13.8 | 12.4 | 0.0 | 5.8 |
| Exports of Goods and Services (Annual % Change) | 1.5 | 6.2 | 6.7 | 2.5 | -1.3 |
| Imports of Goods and Services (in % of GDP) | 17.4 | 18.0 | 22.5 | 18.0 | 17.2 |
| Exports of Goods and Services (in % of GDP) | 9.3 | 9.1 | 10.5 | 10.5 | 10.4 |
| Trade Balance (million USD) | -22,172 | -36,859 | -34,407 | -19,528 | -23,500 |
| Trade Balance (Including Service) (million USD) | -24,765 | -40,902 | -37,627 | -21,854 | -26,602 |
| Foreign Trade (in % of GDP) | 26.7 | 27.0 | 33.0 | 28.5 | 27.6 |
Source: WTO – World Trade Organisation ; World Bank , Latest Available Data
| Main Customers (% of Exports) |
2024 |
|---|---|
| United States | 17.3% |
| China | 7.3% |
| United Kingdom | 6.6% |
| United Arab Emirates | 5.4% |
| Germany | 5.3% |
| See More Countries | 58.0% |
| Main Suppliers (% of Imports) |
2024 |
|---|---|
| China | 28.3% |
| United Arab Emirates | 10.0% |
| Saudi Arabia | 7.9% |
| Qatar | 6.6% |
| Indonesia | 5.9% |
| See More Countries | 41.2% |
Source: Comtrade, Latest Available Data
Source: Comtrade, Latest Available Data
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Source: United Nations Statistics Division, Latest Available Data
- Pakistan Muslim League (Nawaz PML-N): centre-right, conservative liberal
- Pakistan Tehreek-e-Insaf (PTI): centre-left-, Islamic democracy, main opposition party
- Muttahida Qaumi Movement (MQM): self-proclaimed 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
- Grand Democratic Alliance (GDA): big-tent, regional political coalition of seven Sindh-based political parties
- Jamiat Ulema-e-Islam (JUI-F): far-right
- Istehkam-e-Pakistan Party (IPP): spit from PTI
- Pakistan Muslim League (PMLQ): centre-right
- Sunni Ittehad Council (SIC): right-wing political alliance of Islamic political and Barelvi religious parties
- Muttahida Majlis-e-Amal (MMA): 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.
Pakistan has a bicameral legislature, consisting of the Senate (upper house) and the National Assembly (lower house). The Senate has 100 seats, with members indirectly elected by provincial assemblies and other electoral colleges to serve six-year terms, with elections held every three years for half of the seats. The National Assembly consists of 342 seats, of which 272 members are directly elected in single-seat constituencies by simple majority vote, while the remaining 70 seats—60 reserved for women and 10 for non-Muslims—are allocated through proportional representation among parties securing more than 5% of the vote.
The President can be impeached and removed from office by a two-thirds majority vote in a joint session of both Houses of Parliament. While the President has the authority to dissolve the National Assembly, this power is exercised on the advice of the Prime Minister. The President does not have the power to unilaterally dismiss the Prime Minister, who can only be removed through a vote of no-confidence in the National Assembly. The Prime Minister, as head of government, cannot independently dissolve Parliament but can recommend its dissolution to the President.
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.
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Latest Update: March 2026
