Economy of Pakistan

Economy of Pakistan

Karachi, the financial centre of Pakistan
Currency	Pakistani rupee (₨) (PKR)
Fiscal year	1 July – 30 June
Trade organisations	WTO, SAARC, ECO, OIC, SAFTA, AIIB, SCO, IMF, Commonwealth of Nations, World Bank, Developing-8, Group of 77 and others
Country group	Developing/Emerging[1] Lower-middle income economy[2]
Statistics
Population	212,215,030 (2018)[3]
GDP	$284.214 billion (nominal; 2019 est.)[4] $1.202 trillion (PPP; 2019 est.)[4]
GDP rank	42th (nominal; 2019) 24th (PPP; 2019)
GDP growth	3.29% (Q2, FY 2019-20)[5] 5.2% (16/17) 5.5% (17/18) 3.3% (18/19e) 2.4% (19/20f)[6] [note 1]
GDP per capita	$1,388 (nominal; 2019 est.)[4] $5,872 (PPP, 2019 est.)[4]
GDP per capita rank	147th (nominal; 2018) 133rd (PPP; 2018)
GDP by sector	Agriculture: 18.5% Industry: 20.3% Services: 61.2% (2019 est.) [7]
Inflation (CPI)	11.1% (Oct 2019)[8] 3.925% (2018)[4]
Base borrowing rate	13.25% (as on 16 July 2019)[9]
Population below poverty line	34.7% on less than $3.20/day (2015)[10] 1.0% in extreme poverty (September 2019)[11] (World Poverty Clock estimate)
Gini coefficient	33.5 medium (2015, World Bank)[12]
Human Development Index	0.560 medium (2018)[13] (152nd) 0.386 IHDI (2018)[14]
Labour force	75,143,667 (2019)[15] 48.9% employment rate (2018)[16]
Labour force by occupation	Agriculture: 37.4% Industry: 24.0% Services: 38.6% (2017–18)[17]
Unemployment	5.7% (2017–18)[17]
Main industries	Textiles and apparel food processing pharmaceuticals surgical instruments construction materials fertilizer shrimp paper products
Ease-of-doing-business rank	108th (medium, 2020)[18]
External
Exports	$24.217 billion (FY 2019)[19]
Export goods	Textiles: $13,553.2 million Food: $4,627.8 million Petroleum: $675.8 million All Other: $1,303.8 million Other Exports: $3,812.3 million[20]
Main export partners	United States 16.7%  China 7.6%  United Kingdom 7.2%  United Arab Emirates 5.7%  Germany 5.4%  Afghanistan 4.9%  Netherlands 3.9% (2019 est.)[21]
Imports	$52.436 billion (FY 2019)[22]
Import goods	Food: $4,749.7 million Machinery: $6,766.2 million Transport: $2,314.7 million Textile: $3,841.4 million Agriculture and other chemicals: $8,390.3 million Metal: $3,903.5 million Miscellaneous: $1,027.4 million All Other: $5,345.4 million Other Imports: $3,533.2 million [23]
Main import partners	China 19.4%  United Arab Emirates 16.9%  Singapore 6.3%  Saudi Arabia 5.7%  United States 4.0%  India 3.2%  Japan 2.9%
FDI stock	$41.865 Billion (FY 2018)[24]
Current account	−$13.830 billion (2019 est.)[25]
Gross external debt	$106.3 billion (Jun 2019)[26] (50th)
Public finances
Public debt	78.6% of GDP (Sep 2019)[27]
Budget balance	−6.5% of GDP (2018 est.)[28]
Revenues	12.7% of GDP, Pkr 4900.7 Billion or $36.0 billion (FY 2019)[29]
Expenses	21.6% of GDP, Pkr 8238.3 Billion or $52.2 billion (FY 2019)[29]
Economic aid	$2.28 billion (2017)[30]
Credit rating	Standard & Poor's:[31] B− (Domestic) B− (Foreign) B− (T&C Assessment) Outlook: Stable Moody's:[32] B3 Outlook: Stable Fitch:[33] B− Outlook: Stable
Foreign reserves	$11.586 billion (10 January 2020)[34] (73th)
Main data source: CIA World Fact Book All values, unless otherwise stated, are in US dollars.

The economy of Pakistan is the 24th largest in the world in terms of purchasing power parity (PPP), and 42nd largest in terms of nominal gross domestic product. Pakistan has a population of over 212.2 million ^[35] (the world's 5th-largest), giving it a nominal GDP per capita of $1,357 in 2019,^[36] which ranks 154th in the world and giving it a PPP GDP per capita of 5,839 in 2019, which ranks 132th in the world for 2019. However, Pakistan's undocumented economy is estimated to be 36% of its overall economy, which is not taken into consideration when calculating per capita income.^[37] Pakistan is a developing country^[38][39][40] and is one of the Next Eleven countries identified by Jim O'Neill in a research paper as having a high potential of becoming, along with the BRICS countries, among the world's largest economies in the 21st century.^[41] The economy is semi-industrialized, with centres of growth along the Indus River.^[42][43][44] Primary export commodities include textiles, leather goods, sports goods, chemicals, carpets/rugs and medical instruments.^[45][46]

Growth poles of Pakistan's economy are situated along the Indus River;^[43][47] the diversified economies of Karachi and major urban centers in the Punjab, coexisting with lesser developed areas in other parts of the country.^[43] The economy has suffered in the past from internal political disputes, a fast-growing population, mixed levels of foreign investment.^[48] Foreign exchange reserves are bolstered by steady worker remittances, but a growing current account deficit – driven by a widening trade gap as import growth outstrips export expansion – could draw down reserves and dampen GDP growth in the medium term.^[49][50] Pakistan is currently undergoing a process of economic liberalization, including privatization of all government corporations, aimed to attract foreign investment and decrease budget deficit.^[51] In October 2016, foreign currency reserves crossed $24.0 billion^[52] which has led to stable outlook on the long-term rating by Standard & Poor's.^[53][54] In 2016, BMI Research report named Pakistan as one of the ten emerging economies with a particular focus on its manufacturing hub.^[55]

In October 2016, the IMF chief Christine Lagarde confirmed her economic assessment in Islamabad that Pakistan's economy was 'out of crisis'^[56] The World Bank predicted in 2016 that by 2018, Pakistan's economic growth will increase to a "robust" 5.4% due to greater inflow of foreign investment, namely from the China-Pakistan Economic Corridor.^[57] As of May 2019, the growth rate has been revised and the IMF has predicted that future growth rates will be 2.9%, the lowest in South Asia.^[58] According to the World Bank, poverty in Pakistan fell from 64.3% in 2002 to 29.5% in 2014.^[59][60][61] The country's worsening macroeconomic position has led to Moody's downgrading Pakistan's debt outlook to "negative".^[62]

In 2017, Pakistan's GDP in terms of purchasing power parity crossed $1 trillion.^[63] By May 2019, the Pakistani rupee had undergone a year-on-year depreciation of 30% vis-a-vis the US Dollar.^[64]

Economic history

First five decades

Pakistan was a middle class and predominantly agricultural country when it gained independence in 1947. Pakistan's average economic growth rate in the first five decades (1947–1997) has been higher than the growth rate of the world economy during the same period. Average annual real GDP growth rates^[65] were 6.8% in the 1960s, 4.8% in the 1970s, and 6.5% in the 1980s. Average annual growth fell to 4.6% in the 1990s with significantly lower growth in the second half of that decade.^[66]

21st century

In 2016, the Atlantic Media Company (AMC) of the United States has ranked Pakistan as a relatively stronger economy in the South Asian markets and expected that it will grow rapidly during days ahead. AMC said that during the period January–July this year, Indian 100 point index was 6.67% while Karachi Stock Exchange (KSE) had achieved 100 point index of 17 percent.^[67]

Economic resilience

Background

Historically, Pakistan's overall economic output (GDP) has grown every year since an 1800 recession. Despite this record of sustained growth, Pakistan's economy had, until a few years ago, been characterised as unstable and highly vulnerable to external and internal shocks. However, the economy proved to be unexpectedly resilient in the face of multiple adverse events concentrated into a four-year (1998–2002) period —

• the Asian financial crisis;
• economic sanctions – according to Colin Powell, Pakistan was "sanctioned to the eyeballs";^[68]
• The global recession of 2001–2002;
• a severe drought – the worst in Pakistan's history, lasting about four years;
• the post-9/11 military action in neighbouring Afghanistan, with a massive influx of refugees from that country;

Macroeconomic reform and prospects

According to many sources, the Pakistani government has made substantial economic reforms since 2000,^[69] and medium-term prospects for job creation and poverty reduction are the best in nearly a decade.

In 2005, the World Bank reported that

"Pakistan was the top reformer in the region and the number 10 reformer globally – making it easier to start a business, reducing the cost to register property, increasing penalties for violating corporate governance rules, and replacing a requirement to license every shipment with two-year duration licences for traders."^[70]

Doing business

The World Bank (WB) and International Finance Corporation's flagship report Ease of Doing Business Index 2019 ranked Pakistan 136 among 190 countries around the globe, indicating a continuous improvement and taking a jump from 147 last year. The top five countries were New Zealand, Singapore, Denmark, Hong Kong and Korea.^[71]

With improvement in ease of doing business ranking and giving an investment friendly road map from government, many new auto sector giants like France's Renault, South Korean's Hyundai and Kia, Chinese JW Forland and German auto giant Volkswagen have stepped in Pakistan auto market through joint ventures with local manufacturers like Dewan Farooque Motors, Khalid Mushtaq Motors and United Motors.^[72]

US oil and gas giant Exxon Mobil has again returned to Pakistan after nearly three decades gap and has acquired 25% shares in offshore drilling in May 2018, with initial survey showing a potential of huge hydrocarbon reserves discovery at offshore.^[73]

With recent agreement from Saudi Arabia to invest more than US dollar 15 billion in establishing a mega oil refinery and petrochemical industry in Gwadar more commitments for investments are on its way to come in this sector especially from UAE, Qatar, Malaysia and Italy.

To boost Pakistan's unstable foreign-exchange reserves, Qatar announced to invest $3 billion the form of deposits and direct investments in the country.^[74] By the end of June 2019, Qatar sent the first $500 million to Pakistan.^[75][76]

Economic indicators of Pakistan (2000–2019)

These are economic indicators of Pakistan from Fiscal Year 2000 to 2018.

Gross domestic product (GDP)

Index	List	FY 2004	FY 2005	FY 2006	FY 2007	FY 2008	FY 2009	FY 2010	FY 2011	FY 2012	FY 2013	FY 2014	FY 2015	FY 2016	FY 2017	FY 2018	FY 2019	FY 2020 Sep (T)
1	GDP at mp (Billion Rupees)[77]	6,203.7	7,126.2	8,216.2	9,239.8	10,637.8	13,199.7	14,867.0	18,276.4	20,046.5	22,385.7	25,168.8	27,443.0	29,075.6	31,922.3	34,618.6	38,558.8	43,585.0
2	US Dollars, last day average exchange rates[78]	58.1722 (30 Jun)	59.6921 (30 Jun)	60.2138 (30 Jun)	60.4060 (30 Jun)	68.2808 (30 Jun)	81.3896 (30 Jun)	85.4634 (30 Jun)	85.9894 (30 Jun)	94.627 (30 Jun)	99.1141 (30 Jun)	98.8088 (30 Jun)	101.7895 (30 Jun)	104.7619 (30 Jun)	104.8861 (30 Jun)	121.5405 (29 Jun)	163.0546 30 Jun	156.2958 30 Sep
3	Nominal GDP (billion US dollars)	106.6	119.4	136.5	153.0	155.8	162.2	174.0	212.5	211.8	225.9	254.7	269.6	277.5	304.4	284.8	236.5	278.9
4	GDP at bp (Billion Rupees)[79]	6,797.9	7,309.1	7,715.8	8,143.0	8,549.1	8,580.0	8,801.4	9,120.3	9,470.3	9,819.1	10,217.1	10,631.6	11,116.8	11,696.9	12,343.5	12,750.1
5	Real GDP growth rate  [80]	7.70%	7.52%	5.56%	5.54%	4.99%	0.36%	2.58%	3.62%	3.84%	3.68%	4.05%	4.06%	4.56%	5.22%	5.53%	3.29

Industrial sector

	List	FY 2004	FY 2005	FY 2006	FY 2007	FY 2008	FY 2009	FY 2010	FY 2011	FY 2012	FY 2013	FY 2014	FY 2015	FY 2016	FY 2017	FY 2018 (R)	FY 2019
6	Industrial sector growth rate  [81][82]	17.37%	6.51%	3.63%	7.73%	8.47%	-5.21%	3.42%	4.51%	2.55%	0.75%	4.53%	5.18%	5.69%	4.55%	4.92%	1.40%
6A	Mining and Quarrying sector growth rate  [81][82]	21.78%	-15.83%	3.60%	7.35%	3.15%	-2.46%	2.75%	-4.42%	5.16%	3.88%	1.40%	4.97%	6.19%	-0.60%	7.72%	-1.96%
6B	Manufacturing sector growth rate  [81][82]	16.38%	16.03%	9.39%	9.03%	6.10%	-4.18%	1.37%	2.50%	2.08%	4.85%	5.65%	3.88%	3.69%	5.83%	5.43%	-0.27%
6B(i)	Large Scale Manufacturing growth rate  [81][82]	18.83%	18.12%	9.92%	9.58%	6.10%	-6.04%	0.41%	1.66%	1.13%	4.46%	5.46%	3.28%	2.98%	5.64%	5.12%	-2.06%
6B(ii)	Small Scale Manufacturing growth rate  [81][82]	7.51%	7.51%	8.70%	8.25%	8.34%	8.57%	8.47%	8.51%	8.35%	8.28%	8.29%	8.21%	8.19%	8.15%	8.17%	8.20%
6B(iii)	Slaughtering sector growth rate  [81][82]	3.94%	4.00%	4.05%	3.16%	3.26%	3.82%	3.16%	3.67%	3.53%	3.63%	3.38%	3.34%	3.61%	3.55%	3.50%	3.47%

Agricultural sector

Index	List	FY 2004	FY 2005	FY 2006	FY 2007	FY 2008	FY 2009	FY 2010	FY 2011	FY 2012	FY 2013	FY 2014	FY 2015	FY 2016	FY 2017	FY 2018 (R)	FY 2019
7	Agriculture sector growth rate  [83][84]	2.85%	7.02%	1.27%	3.42%	1.81%	3.50%	0.23%	1.96%	3.62%	2.68%	2.50%	2.13%	0.15%	2.18%	3.94%	0.85%
7A	Wheat production (million tons)  [85][84]	19.5	21.6	21.3	23.3	20.9	24.0	23.3	25.2	23.5	24.2	26.0	25.1	25.6	26.7	25.1	24.3
7B	Rice production (million tons)  [85][84]	4.8	5.0	5.5	5.4	5.6	6.9	6.9	4.8	6.2	5.6	6.8	7.0	6.8	6.8	7.5	7.2
7C	Sugarcane production (million tons)  [85][84]	53.4	47.2	44.7	54.7	63.9	50.0	49.4	55.3	58.4	63.8	67.5	62.8	65.5	75.5	83.3	67.2
7D	Cotton production (million bales)  [85][84]	10.0	14.3	13.0	12.9	11.7	11.8	12.9	11.5	13.6	13.0	12.8	14.0	9.9	10.7	11.9	9.9

Commodity producing sector growth rate

Index	List	2003–2004	2004–2005	2005–2006	2006–2007	2007–2008	2008–2009	2009–2010	2010–2011	2011–2012	2012–2013	2013–2014	2014–2015	2015–2016	2016–2017	2017–2018	2018-2019
8	Commodity producing sector growth rate  [80]	9.23%	6.78%	2.38%	5.48%	5.05%	-0.88%	1.76%	3.21%	3.09%	1.73%	3.49%	3.63%	2.92%	3.40%	4.45%	1.13

Service sector

Index	List	2003-2004	2004-2005	2005–2006	2006–2007	2007–2008	2008–2009	2009–2010	2010–2011	2011–2012	2012–2013	2013–2014	2014–2015	2015–2016	2016–2017	2017-2018	2018-2019
9	Service sector growth rate  [80][86]	6.43%	4.71%	6.45%	8.14%	8.20%	5.58%	4.94%	1.33%	3.21%	3.94%	4.40%	5.13%	4.46%	4.36%	5.72%	6.52%

Per capita income

Index	List	FY 2000	FY 2004	FY 2005	FY 2006	FY 2007	FY 2008	FY 2009	FY 2010	FY 2011	FY 2012	FY 2013	FY 2014	FY 2015	FY 2016	FY 2017	FY 2018	FY 2019
10	Per capita income (US dollars)  [36]	746.0	663.2	724.1	897.4	979.9	1053.2	1026.1	1072.4	1274.1	1320.5	1333.7	1388.8	1514.0	1530.8	1630.1	1652.0	1497.3

Inflation

Index	List	FY 2000	FY 2004	FY 2005	FY 2006	FY 2007	FY 2008	FY 2009	FY 2010	FY 2011	FY 2012	FY 2013	FY 2014	FY 2015	FY 2016	FY 2017	FY 2018	FY 2019
11	Consumer price index growth rate  [36]	7.3%	4.7%	9.3%	7.9%	7.8%	12.0%	24.6%	10.1%	13.7%	11.0%	7.4%	8.6%	4.5%	2.9%	4.2%	3.9%	7.0%

Government revenues and expenditures

Index	List	FY 2004	FY 2005	FY 2006	FY 2007	FY 2008	FY 2009	FY 2010	FY 2011	FY 2012	FY 2013	FY 2014	FY 2015	FY 2016	FY 2017	FY 2018	FY 2019	FY 2020 Jul-Sep
12	Government total revenues (billion rupees)  [87][88][89][90][91][92][93]	794.1	900.0	1076.6	1298.0	1499.4	1850.9	2077.8	2252.9	2566.5	2982.4	3637.3	3931.0	4447.0	4936.7	5228.0	4900.7	1489.1
12-a	Total tax revenue (billion rupees)  [87][88][89][90][91][93]	550.1	632.6	753.0	919.3	1065.2	1316.7	1472.5	1699.3	2052.9	2199.2	2564.5	3017.6	3660.4	3969.2	4467.2	4473.4	1142.9
12-a-i	FBR tax collection (billion rupees)  [94][93]	-	-	-	-	1008.1	1161.2	1327.4	1558.0	1882.7	1946.4	2254.5	2590.0	3112.5	3367.9	3842.1	3829.5	964.4
13	Government total expenditures (billion rupees)  [87][88][89][90][91][92][93]	923.6	1117.0	1401.8	1675.5	2276.5	2531.3	3007.2	3447.3	3936.2	4816.3	5026.0	5387.8	5796.3	6800.5	7488.4	8345.6	1775.1
14	Fiscal deficit (billion rupees)  [87][88][89][90][91]	129.5	217.0	325.2	377.5	777.2	680.4	929.4	1194.4	1369.7	1833.9	1388.7	1456.7	1349.3	1863.8	2260.4	3444.9	286.0
15	Total revenues as % of GDP  [85]	14.3%	13.8%	13.1%	14.0%	14.1%	14.0%	14.0%	12.3%	12.8%	13.3%	14.5%	14.3%	15.3%	15.5%	15.1%	12.7
16	Tax revenue as % of GDP  [87][88][89][90]	11.0	10.1%	9.8%	9.6%	9.9%	9.1%	9.9%	9.3%	10.2%	9.8%	10.2%	11.0%	12.6%	12.4%	13.0%	11.6
17	Total expenditures as % of GDP  [85]	16.7%	17.2%	17.1%	18.1%	21.4%	19.2%	20.2%	18.9%	21.4%	21.5%	20.0%	19.6%	19.9%	21.3%	21.6%	21.6
18	Fiscal Deficit as % of GDP  [95][96]	2.4%	3.3%	4.0%	4.1%	7.3%	5.2%	6.2%	6.5%	8.8%	8.2%	5.5%	5.3%	4.6%	5.8%	6.5%	8.9

Current account

Amounts in Million US Dollars ^[97][98]

Index	List	FY 2003	FY 2004	FY 2005	FY 2006	FY 2007	FY 2008	FY 2009	FY 2010	FY 2011	FY 2012	FY 2013	FY 2014	FY 2015	FY 2016	FY 2017	FY 2018	FY 2019	FY 2020 Jul-Sep
19	Credit	20,570	22,003	27,006	31,761	33,016	37,247	35,357	38,135	47,703	48,243	50,197	51,153	52,920	51,336	51,867	54,443	55,057	13,590
20	Debit	16,500	20,192	28,540	36,751	39,894	51,121	44,617	42,081	47,489	52,901	52,693	54,283	55,629	56,203	64,488	74,340	68,887	15,138
30	Net	4,070	1,811	-1,534	-4,990	-6,878	-13,874	-9,261	-3,946	214	-4,658	-2,496	-3,130	-2,709	-4,867	-12,621	-19,897	-13,830	1,548

Government debt and liabilities

• Total Public Debt = Gross Public Debt + External Liabilities
• Gross Public Debt = Government (Federal+Provincial) Domestic Debt + Government (Federal+Provincial) External Debt + Debt from IMF
• Total Debt of Government / Net Public Debt = Gross Public Debt – Government Deposits in the Banking System. (introduced in June 2017)
• Public External Debt = Government External Debt + Debt from IMF (Foreign Exchange Liabilities are not included)
• Total External Debt = Public External Debt + Public Sector Enterprises + Banks + Private Sector + Debt Liabilities to Direct Investors

Index	List	Jun 2005	Jun 2006	Jun 2007	Jun 2008	Jun 2009	Jun 2010	Jun 2011	Jun 2012	Jun 2013	Jun 2014	Jun 2015	Jun 2016	Jun 2017	Jun 2018	Sep 2019
19	Total Public Debt (Billion Rupees)  [99][100]	-	-	-	-	7835.5	9,232.2	10,990.7	12,924.3	14,574.7	16,315.5	17,757.7	20,053.7	21,785.5	25,574.1	35,859.7
19(a)	Total Public Debt as % of GDP  [99][100]	-	-	-	-	59.4%	62.1%	60.1%	64.5%	65.1%	64.8%	64.7%	69.0%	68.2%	73.9%	82.3%
20	Gross Public Debt (Billion Rupees)  [99][100]	-	-	-	-	7,731.1	9,010.4	10,770.8	12,696.7	14,291.7	15,991.3	17,380.2	19,676.6	21,408.7	24,952.9	34240.6
20(a)	Gross Public Debt as % of GDP  [99][100]	-	-	-	-	58.6%	60.6%	58.9%	63.3%	63.9%	63.5%	63.3%	67.7%	67.1%	72.1%	78.6%
21	Total Debt Of Government / Net Public Debt ( Billion Rupees)  [99][100]	-	-	-	-	7,204.9	8,410.8	9,927.6	11,890.2	13,457.3	14,623.9	15,986.0	17,823.2	19,635.4	23,024.0	29,300.0
21(a)	Total Debt Of Government / Net Public Debt as % of GDP  [99][100]	-	-	-	-	54.6%	56.6%	54.3%	59.3%	60.1%	58.1%	58.3%	61.3%	61.4%	66.5%	67.2%
22	Public External Debt (Billion US $)  [101][102]	34.0	35.7	38.7	40.7	46.4	49.8	55.3	53.5	48.1	51.3	50.9	57.7	62.5	70.2	73.8
22(a)	Public External Debt as % of GDP  [101][102]	29.6%	26.9%	25.4%	26.1%	28.6%	28.7%	26.0%	25.2%	21.4%	20.2%	18.9%	20.8%	20.5%	24.7%	26.5%
23	Total External Debt (Billion US $) [101][102]	35.4	37.2	40.3	46.1	52.3	61.6	66.3	65.5	60.9	65.3	65.2	73.9	83.5	95.2	106.9

Pakistan External Debt Servicing (Principal + Interest)^[103]

Index	List	FY 2004	FY 2005	FY 2006	FY 2007	FY 2008	FY 2009	FY 2010	FY 2011	FY 2012	FY 2013	FY 2014	FY 2015	FY 2016	FY 2017	FY 2018	FY 2019 Jul-Sep
24	Principal (Million US $)	4115	1916	1718	1593	1867	2837	3140	2458	3294	5046	5659	3499	3076	3325	6527	1873
25	Interest (Million US $)	916	867	906	1091	1248	1159	1015	1074	1019	933	909	1172	1346	2317	2951	798
26	Total (Million US $)	5030	2783	2624	2684	3115	3996	4155	3531	4312	5978	6567	4671	4422	5642	9478	2671

Foreign exchange reserves

Index	List	FY 2004[104]	FY 2005[105]	FY 2006[106]	FY 2007[107]	FY 2008[108]	FY 2009[109]	FY 2010[110]	FY 2011[111]	FY 2012[112]	FY 2013[113]	FY 2014[114]	FY 2015[115]	FY 2016[116]	FY 2017[117]	FY 2018[118]	FY 2019[119]	FY 2020 Jul. - Dec.[120]
24	Foreign exchange reserves SBP + Scheduled Banks (Billion US Dollars)	12.389	12.598	13.122	15.647	11.399	12.425	16.750	18.244	15.289	11.020	14.141	18.699	23.099	21.403	16.384	14.477	18.081

Foreign direct investment

Index	List	FY 2004	FY 2005	FY 2006	FY 2007	FY 2008	FY 2009	FY 2010	FY 2011	FY 2012	FY 2013	FY 2014	FY 2015	FY 2016	FY 2017	FY 2018	FY 2019	FY 2020 Jul-Nov
25	Foreign direct investment (Million US Dollars)  [121][122]	949.4	1524.0	3521.0	5139.6	5410.2	3719.9	2150.8	1634.8	820.6	1456.5	1698.6	987.9	2305.3	2746.8	3471.2	1737.1	850.1

PSE 100 index growth rate

Index	List	2003–2004	2004–2005	2005–2006	2006–2007	2007–2008	2008–2009	2009–2010	2010–2011	2011–2012	2012–2013	2013–2014	2014–2015	2015–2016	2016–2017	2017–2018	2018-2019
26	PSE 100 index growth rate  [85][123]	55.2%	41.1%	34.1%	37.9%	-10.8%	-41.7%	35.7%	28.5%	10.4%	52.2%	41.2%	16.0%	9.8%	23.2%	-10.0%	-7.8

Foreign trade

Note : This is the merchandised trade data (export and import) as released by the SBP. This may differ from the data compiled by Pakistan Bureau of Statistics.

Index	List	FY 2004	FY 2005	FY 2006	FY 2007	FY 2008	FY 2009	FY 2010	FY 2011	FY 2012	FY 2013	FY 2014	FY 2015	FY 2016	FY 2017	FY 2018	FY 2019	FY 2020 Jul-Nov
27	USD to PKR exchange rates  [124]	57.5745	59.3576	59.8566	60.6342	62.5465	78.4983	83.8017	85.5017	89.2359	96.7272	102.8591	101.2947	104.2351	104.6971	109.8444	136.0900
28	Exports of Pakistan (billion US dollars)  [125][126]	12.396	14.401	16.553	17.278	20.427	19.121	19.673	25.354	24.718	24.802	25.078	24.089	21.972	22.003	24.768	24.217	10.309
29(a)	Exports growth rate  [125]	13.8%	16.2%	13.8%	4.5%	18.0%	-6.4%	2.9%	28.9%	-2.6%	0.3%	1.1%	-3.9%	-8.8%	0.1%	12.6%	-2.2%
30	Imports of Pakistan (billion US dollars)  [125][126]	13.604	18.753	24.994	26.989	35.397	31.747	31.132	35.796	40.371	40.157	41.668	41.357	41.255	48.683	56.596	52.436	18.311
31(a)	Imports growth rate  [125]	20.0%	37.8%	31.6%	8.0%	31.2%	-10.3%	-1.7%	15.0%	12.8%	-0.5%	3.8%	-0.7%	-0.2%	18.0%	16.2%	-7.3%
32	Trade deficit (billion US dollars)  [125][126]	1.208	4.352	8.441	9.711	14.970	12.627	11.452	10.427	15.652	15.355	16.590	17.267	19.283	26.680	31.824	28.219	8.002
33	Trade deficit as % of GDP  [85]	1.2%	4.0%	6.5%	6.2%	8.8%	7.5%	6.5%	4.9%	7.0%	6.6%	6.8%	6.4%	6.9%	8.8%	10.1%	11.9%

Workers' remittances

Index	List	FY 2004	FY 2005	FY 2006	FY 2007	FY 2008	FY 2009	FY 2010	FY 2011	FY 2012	FY 2013	FY 2014	FY 2015	FY 2016	FY 2017	FY 2018	FY 2019	FY 2020 (Jul_Dec)
34	Workers' remittances (billion US dollars )  [127][128][25]	–	–	4.6	5.4	6.4	7.8	8.9	11.2	13.1	13.9	15.8	18.7	19.9	19.4	19.9	21.8	11.0
35	Workers' remittances growth rate  [85]	-8.6%	7.7%	10.4%	19.4%	17.4%	21.1%	14.0%	25.8%	17.7%	5.6%	13.7%	18.2%	6.4%	-2.8%	2.9%	9.7%

Stock market

In the first four years of the twenty-first century, Pakistan's KSE 100 Index was the best-performing stock market index in the world as declared by the international magazine "Business Week".^{[130][citation needed]} The stock market capitalisation of listed companies in Pakistan was valued at $5,937 million in 2005 by the World Bank.^[131] But in 2008, after the General Elections, uncertain political environment, rising militancy along western borders of the country, and mounting inflation and current account deficits resulted in the steep decline of the Karachi Stock Exchange. As a result, the corporate sector of Pakistan has declined dramatically in recent times. However, the market bounced back strongly in 2009 and the trend continues in 2011. By 2014 the stock market burst into uncharted territories as the benchmark KSE 100 Index rose 907 points (3.1%) and shot past the 30,000-point barrier to close at a new record high, this came days after Moody's announced that it was upgrading the outlook of 5 major Pakistani banks from Negative to Stable, resulting in heavy buying in the banking sector. The rally was supported by heavy buying in the oil and gas and cement sectors.^[132] On 11 January 2016, aimed to help reduce market fragmentation and create a strong case for attracting strategic partnerships necessary for providing technological expertise all the three stock exchanges including Karachi Stock Exchange, Lahore Stock Exchange and Islamabad Stock Exchange were inducted into a unified Pakistan Stock Exchange.^[133] In May 2017 American provider of stock market indexes and analysis tools, MSCI has confirmed that the Pakistan Stock Exchange (PSX) has been reclassified from Frontier Markets to Emerging Markets in its semi-annual index review.^[134] Euphoria over the stock exchange's reclassification as an emerging market propelled the PSE-100 Index past another milestone when the Index recorded an increase of 636.96 points, or 1.23%, to end at 52,387.87.^[135] In the fiscal year 2018, the stock market showed a negative growth of 7.1% over the last fiscal year and stood at 47000 points at average.^[36]

Middle class

(As of 2017), according to Wall Street Journal, citing estimates largely based on income and the purchase of consumption goods, had suggested that as many as 42% of Pakistan's population may now belong to the upper and middle classes. If these numbers are correct, or even indicative in any broad sense, then 87 million Pakistanis belong to the middle and upper classes, a population size which is larger than that of Germany.^[136] Official figures also show that the proportion of households that own a motorcycle and washing machines has grown impressively over the past 15 years.^[137] Furthermore, the IBA-SBP Consumer Confidence Index recorded its highest-ever level of 174.9 points in January 2017, showing an increase of 17 points from July 2016.

Separately, consumer financing posted an increase of Rs37.6 billion during first half of the current fiscal year of 2017. Auto finance continued to be the dominated segment, while personal loans showed a pickup as well. "The net credit off-take of Rs13.7 billion of personal loans witnessed in first half of the fiscal year 2017 is the highest half-year figure in about a decade," the report stated.^[136]

Poverty alleviation expenditures

Pakistan government spent over 1 trillion Rupees (about $16.7 billion) on poverty alleviation programmes during the past four years, cutting poverty from 35% in 2000–01 to 29.3% in 2013 and 17% in 2015.^[139] Rural poverty remains a pressing issue, as development there has been far slower than in the major urban areas.

Employment

The high population growth in the past few decades has ensured that a very large number of young people are now entering the labor market. Even though it is among the six most populous Asian nations. In the past, excessive red tape made firing from jobs, and consequently hiring, difficult.^[140] Significant progress in taxation and business reforms has ensured that many firms now are not compelled to operate in the underground economy.^[141]

"In 2016 government took a remarkable initiative by announcing the Prime Minister's Youth Program to combat unemployment in the country. This program has a broad canvas of schemes enabling youth and poor segment of society to get better employment opportunities, economic empowerment, acquiring skills needed for gainful employment, access to IT and imparting on-the-job training for young graduates to improve the probability of getting a productive job. Prime Minister’s Youth Program includes six schemes which are Prime Minister’s Youth Business Loan Scheme, Prime Minister’s Interest Free Loan Scheme, Prime Minister’s Youth Skill Development Program, Prime Minister’s Program for Provision of Laptops to Talented Students, Prime Minister’s Fee Reimbursement Scheme,Prime Minister’s Youth Training Scheme".^[142] Government sector is also contributing in employment and according to estimate 4.5 million people are employed by federal, provincial and local governments in different sectors from Armed forces to education and health.^[143]

Tourism

Tourism in Pakistan has been stated as being the tourism industry's "next big thing". Pakistan , with its diverse cultures, people and landscapes, has attracted 90 million tourists to the country, almost double to that of a decade ago. Due to threat of terrorism the number of foreigner tourists has gradually declined and the shock of 2013 Nanga Parbat tourist shooting has terribly adversely effected the tourism industry.^[144] (As of 2016) tourism has begun to recover in Pakistan, albeit gradually.^[145]

Revenue

Although the country is a Federation with constitutional division of taxation powers between the Federal Government and the four provinces, the revenue department of the Federal Government, the Federal board of Revenue, collects almost 86% of the entire national tax collection. The Federal Board of Revenue collected 3.842 trillion rupees in taxes against the revised target of 3.935 trillion rupees in the fiscal year 2017–2018. In FY 2013, FBR tax collection was Rs.1,946 billion. So in only 5 years it almost double its tax revenue which is a phenomenal achievement.^[146]

Currency system

Main page: Finance:Pakistani rupee

Rupee

The basic unit of currency is the Rupee, ISO code PKR and abbreviated Rs, which is divided into 100 paisas. Currently the newly printed 5,000 rupee note is the largest denomination in circulation. Recently the SBP has introduced all new design notes of Rs. 10, 20, 50, 100, 500, 1000 and 5000.

The Pakistani Rupee was pegged to the Pound sterling until 1982, when the government of General Zia-ul-Haq, changed it to managed float. As a result, the rupee devalued by 38.5% between 1982/83 many of the industries built by his predecessor suffered with a huge surge in import costs. After years of appreciation under Zulfikar Ali Bhutto and despite huge increases in foreign aid the Rupee depreciated.

Foreign exchange rate

The Pakistani rupee depreciated against the US dollar until around the start of the 21st century, when Pakistan's large current-account surplus pushed the value of the rupee up versus the dollar. Pakistan's central bank then stabilised by lowering interest rates and buying dollars, in order to preserve the country's export competitiveness

Foreign exchange reserves

Pakistan maintains foreign reserves with State Bank of Pakistan. The currency of the reserves was solely US dollar incurring speculated losses after the dollar prices fell during 2005, forcing the then Governor SBP Ishrat Hussain to step down. In the same year the SBP issued an official statement proclaiming diversification of reserves in currencies including Euro and Yen, withholding ratio of diversification.

Following the international credit crisis and spikes in crude oil prices, Pakistan's economy could not withstand the pressure and on 11 October 2008, State Bank of Pakistan reported that the country's foreign exchange reserves had gone down by $571.9 million to $7749.7 million.^[147] The foreign exchange reserves had declined more by $10 billion to a level of $6.59 billion. in June 2013 Pakistan was on the brink of default on its financial commitments. Country's Forex reserves were at an historic low covering only two weeks' worth of imports. Today in November 2017 Pakistan's Foreign exchange reserves are at a comfortable level (20 billion dollars), sufficient to cover about 3 months of imports.

Structure of economy

Agriculture accounted for about 53% of GDP in 1947. While per-capita agricultural output has grown since then, it has been outpaced by the growth of the non-agricultural sectors, and the share of agriculture has dropped to roughly one-fifth of Pakistan's economy. In recent years, the country has seen rapid growth in industries (such as apparel, textiles, and cement) and services (such as telecommunications, transportation, advertising, and finance).^{[citation needed]}

Major sectors

Agriculture

The most important crops are wheat, sugarcane, cotton, and rice, which together account for more than 75% of the value of total crop output. Pakistan's largest food crop is wheat. In 2017, Pakistan produced 26,674,000 tonnes of wheat, almost equal to all of Africa (27.1 million tonnes) and more than all of South America (25.9 million tonnes), according to the FAOSTAT.^[148] In the current year of 2018/19 Pakistan has exported 1.7 million tonnes of wheat and 4.0 million tonnes of rice so far.^[149] Pakistan has also cut the use of dangerous pesticides dramatically.^[150]

Pakistan is a net food exporter, except in occasional years when its harvest is adversely affected by droughts. Pakistan exports rice, cotton, fish, fruits (especially Oranges and Mangoes), and vegetables and imports vegetable oil, wheat, pulses and consumer foods. The country is Asia's largest camel market, second-largest apricot and ghee market and third-largest cotton, onion and milk market. The economic importance of agriculture has declined since independence, when its share of GDP was around 53%. Following the poor harvest of 1993, the government introduced agriculture assistance policies, including increased support prices for many agricultural commodities and expanded availability of agricultural credit. From 1993 to 1997, real growth in the agricultural sector averaged 5.7% but has since declined to about 4%. Agricultural reforms, including increased wheat and oil seed production, play a central role in the government's economic reform package.

Majority of the population, directly or indirectly, dependent on this sector. It contributes about 18.5% percent of Gross Domestic Product (GDP) and accounts for 37.4% of employed labor force and is the largest source of foreign exchange earnings.^[84] During 2017–18, agriculture sector recorded a remarkable growth of 3.70 percent and surpassed its targeted growth of 3.5 percent and last year's growth of 2.18 percent. All the major crops showed a positive trend in their production except maize.^[151] Sugarcane and rice production surpassed their historic level with 82.1 and 7.4 million tons respectively. Pakistan Bureau of Statistics provisionally valued this sector at Rs. 7,764,218 million for the year 2018 thus registering the growth of 6.1% over the last year.^[77] Again in 2018-19, Agriculture sector did not hit its target growth and only grew by 0.85%. Major crops except wheat fell below their previous year output. Pakistan's Top commodities productions in 2017 and provisionally in 2018 are :^[152]

Commodity	Value	2016–2017	2017-2018(P)
Wheat	Tonnes	26,674,000	25,492,000
Cotton	Bales	10,671,000	11,935,000
Rice	Tonnes	6,849,000	7,442,000
Sugarcane	Tonnes	75,482,000	82,102,000
Maize	Tonnes	6,134,000	5,702,000

Pakistan's principal natural resources are arable land and water. About 25% of Pakistan's total land area is under cultivation and is watered by one of the largest irrigation systems in the world. Pakistan irrigates three times more acres than Russia. Pakistan agriculture also benefits from year round warmth. Agriculture accounts for about 18.9% of GDP and employs about 42.3% of the labour force. Zarai Taraqiati Bank Limited is the largest financial institution geared towards the development of agriculture sector through provision of financial services and technical expertise.

Mining

Pakistan is endowed with significant mineral resources and is emerging as a very promising area for prospecting/exploration for mineral deposits. Based on available information, the country's more than 6,00,000 km² of outcrops area demonstrates varied geological potential for metallic and non-metallic mineral deposits. In the wake of 18th amendment to the constitution all the provinces are free to exploit and explore the mineral resources which are in their jurisdiction. Mining and quarrying contributes 13.19% in industrial sector and its share in GDP is 2.8%. Pakistan mining and quarrying sector grew by 3.04% in 2018 against the negative growth of -0.38% last year.

In the recent past, exploration by government agencies as well as by multinational mining companies presents ample evidence of the occurrences of sizeable minerals deposits. Recent discoveries of a thick oxidised zone underlain by sulphide zones in the shield area of the Punjab province, covered by thick alluvial cover have opened new vistas for metallic minerals exploration. Pakistan has a large base for industrial minerals. The discovery of coal deposits having over 175 billion tonnes of reserves at Thar in the Sindh province has given an impetus to develop it as an alternative source of energy. There is vast potential for precious and dimension stones.

Extraction of principal minerals in the last 4 fiscal years is given in the table below :-^[153]

Minerals	Unit of quantity	2014–2015	2015–2016	2016–2017	2017–2018
Coal	Metric Ton	3,406,851	3,749,312	3,953,992	4,469,938
Natural Gas	MMCFT	1,465,759	1,481,550	1,471,854	1,458,933
Crude Oil	JSB	34,490,000	31,652,000	32,269,000	32,558,000
Chromite	Metric Ton	100,516	69,333	105,238	97,420
Magnesite	Metric Ton	4,611	35,228	19,656	23,596
Dolomite	Metric Ton	223,117	666,755	301,124	488,825
Gypsum	Metric Ton	1,417,007	1,871,716	2,079,629	2,489,451
Limestone	Metric Ton	39,819,401	48,296,551	52,144,064	70,792,933
Rock Salt	Metric Ton	2,136,361	3,552,984	3,534,075	3,590,511
Sulphur	Metric Ton	19,730	14,869	23,740	22,040
Barytes	Metric Ton	118,568	157,858	91,711	88,847
Soap Stone	Metric Ton	100,724	125,985	152,279	141,504
Marble	Metric Ton	2,520,170	4,747113	4,904,141	8,812,892
Bauxite	Metric Ton	24,689	57,024	75,375	146,045
Quartz	Metric Ton	38,117	90,588	98,909	126,324

Industry

Pakistan's industrial sector accounts for approximately 18.17% of GDP.^[154] In 2018 it recorded a growth of 5.80% as compared to the growth of 5.43% in 2017.^[155] Manufacturing is the largest of Pakistan's industrial sectors, accounting for approximately 12.13% of GDP.^[156] Manufacturing sub-sector is further divided in three components including large-scale manufacturing (LSM) with the share of 79.6% percent in manufacturing sector, small scale manufacturing share is 13.8 percent in manufacturing sector, while slaughtering contributes 6.5 percent in the manufacturing.^[157] Major sectors in industries include cement, fertiliser, edible oil, sugar, steel, tobacco, chemicals, machinery, food processing and medical instruments, primarily surgical.^{[158][159][160]} Pakistan is one of the largest manufacturers and exporters of surgical instruments.^[161][162]

The government is privatizing large-scale industrial units, and the public sector accounts for a shrinking proportion of industrial output, while growth in overall industrial output (including the private sector) has accelerated. Government policies aim to diversify the country's industrial base and bolster export industries. Large Scale Manufacturing is the fastest-growing sector in Pakistani economy.^[163] Major Industries include textiles, fertiliser, cement, oil refineries, dairy products, food processing, beverages, construction materials, clothing, paper products and shrimp.

In Pakistan SMEs have a significant contribution in the total GDP of Pakistan, according to SMEDA and Economic survey reports, the share in the annual GDP is 40% likewise SMEs generating significant employment opportunities for skilled workers and entrepreneurs. Small and medium scale firms represent nearly 90% of all the enterprises in Pakistan and employ 80% of the non-agricultural labor force. These figures indicate the potential and further growth in this sector.^[140]

Pakistan's largest corporation are mostly involved in utilities like oil, gas and telecommunication:

Rank[164]	Name	Headquarters	Revenue (Mil. $)
01.	Pakistan State Oil	Karachi	13,094[165]
02.	Pak-Arab Refinery	Qasba Gujrat	3,000
03.	Sui Northern Gas Pipelines Limited	Lahore	2,520
04.	Shell Pakistan	Karachi	2,380
05.	Oil and Gas Development Company	Islamabad	2,230
06.	National Refinery	Karachi	1,970
07.	Hub Power Company	Hub, Balochistan	1,970
08.	K-Electric	Karachi	1,951[166]
09.	Attock Refinery	Rawalpindi	1,740
010.	Attock Petroleum	Rawalpindi	1,740
011.	Pakistan Telecommunication Company	Islamabad	1,326
012.	Engro Corporation	Karachi	1,012[167]
013.	Fauji Fertilizer Company Limited	Rawalpindi	754

Construction material

In 1947, Pakistan had inherited four cement plants with a total capacity of 0.5 million tons. Some expansion took place in 1956–66 but could not keep pace with the economic development and the country had to resort to imports of cement in 1976–77 and continued to do so until 1994–95. The cement sector consisting of 27 plants is contributing above Rs 30 billion to the national exchequer in the form of taxes. However, by 2013, Pakistan's cement is fast-growing mainly because of demand from Afghanistan and countries boosting real estate sector, In 2013 Pakistan exported 7,708,557 metric tons of cement.^[168] Pakistan has installed capacity of 44,768,250 metric tons of cement and 42,636,428 metric tons of clinker. In the 2012–2013 cement industry in Pakistan became the most profitable sector of economy.^[169]

Information communication technology industry

The information communication technology (ICT) industry grossed over $4.8 billion in 2013. It is expected to exceed the $13 billion mark by 2018.^[170] A marked increase in software export figures are an indication of this booming industry's potential. The total number of IT companies increased to 1306 and the total estimated size of IT industry is $2.8 billion. In 2007, Pakistan was for the first time featured in the Global Services Location Index by A.T. Kearney and was rated as the 30th best location for offshoring.^[171] By 2009, Pakistan had improved its rank by ten places to reach 20th.^[172] According to Pakistan Startup report, there are about 1 million freelancers working from Pakistan mainly via Elance, Upwork, Fiverr, Guru, and freelancer – world's famous online marketplaces that count Pakistan among top 5 freelancing nations. An annual report that updated by State bank of Pakistan shows Pakistan cross 1 billion ($) IT Export which is a good achievement of Pakistan IT Industry. Also, an official said that Pakistan Freelance community generate 1 billion ($) revenue this year. Overall Pakistan makes 2 billion ($) IT export worldwide.^[173]

Defence industry

The defence industry of Pakistan, under the Ministry of Defence Production, was created in September 1951 to promote and coordinate the patchwork of military production facilities that have developed since independence.It is currently actively participating in many joint production projects such as Al Khalid 2, advance trainer aircraft, combat aircraft, navy ships and submarines. Pakistan is manufacturing and selling weapons to over 40 countries, bringing in $20 million annually.The country's arms imports increased by 119 percent between the 2004–2008 and 2009–13, with China providing 54pc and the USA 27pc of Pakistan's imports.

Textiles

Most of the Textile Industry is established in Punjab. Before 1990, the situation was different; most of the industry was in Karachi. Textile industry in Pakistan is traditional and conservative, producing and exporting most of low cost raw articles e.g. Raw Cotton, Yarn, fabric etc. Share of finished goods and branded articles is nominal. Pakistan has a potential to quadruple its textile production and export, due to emerging Chinese markets and with its existing infrastructure. 10% of United States imports regarding clothing and other form of textiles is covered by Pakistan.^{[citation needed]}

The textile sector accounts for 70% of Pakistan's exports, but the working conditions of workers are deplorable. Small manufacturing workshops generally do not sign employment contracts, do not respect the minimum wage and sometimes employ children. Violations of labour law also occur among major subcontractors of international brands, where workers may be beaten, insulted by their superiors or paid below the minimum wage. Factories do not comply with safety standards, leading to accidents: in 2012, 255 workers died in a fire at a Karachi factory. With 547 labour inspectors in Pakistan supervising the country's 300,000 factories, the textile industry is out of control. Nor are workers protected by trade unions, which are prohibited in industrial export zones. Elsewhere, "workers involved in the creation of trade unions are victims of violence, intimidation, threats or dismissals".^[174]

Other

(As of 2010), Pakistan is one of the largest users of CNG (compressed natural gas) in the world. Presently, more than 3,000 CNG stations are operating in the country in 99 cities and towns, and 1000 more would be set up in the next two years. It has provided employment to over 50,000 people in Pakistan, but the CNG industry is struggling to survive the 2013 energy crisis.^[175][176]

Services

Pakistan's service sector accounts for about 60.2% of GDP.^[177] Transport, storage, communications, finance, and insurance account for 24% of this sector, and wholesale and retail trade about 30%. Pakistan is trying to promote the information industry and other modern service industries through incentives such as long-term tax holidays.

Telecommunication

After the deregulation of the telecommunication industry, the sector has seen an exponential growth. Pakistan Telecommunication Company Ltd has emerged as a successful Forbes 2000 conglomerate with over US$1 billion in sales in 2005. The mobile telephone market has exploded many-fold since 2003 to reach a subscriber base of 140 million users in July 2017, one of the highest mobile teledensities in the entire world.^[178] In addition, there are over 6 million landlines in the country with 100% fibre-optic network and coverage via WLL in even the remotest areas.^[179] As a result, Pakistan won the prestigious Government Leadership award of GSM Association in 2006.^[180]

The World Bank estimates that it takes about 3 days to get a phone connection in Pakistan.^[181]

In Pakistan, the following are the top mobile phone operators:

1. Jazz Pakistan (Parent: VEON, Netherland)
2. Ufone (Parent: PTCL (Etisalat), Pakistan/UAE)
3. Telenor (Parent: Telenor, Norway)
4. Zong (Parent: China Mobile, China)

By March 2009, Pakistan had 91 million mobile subscribers – 25 million more subscribers than reported in the same period in 2008. In addition to the 3.1 million fixed lines, while as many as 2.4 million are using Wireless Local Loop connections. Sony Ericsson, Nokia and Motorola along with Samsung and LG remain the most popular brands among customers.^[182]

Since liberalisation, over the past four years,^[when?] the Pakistani telecom sector has attracted more than $9 billion in foreign investments.^[183] During 2007–08, the Pakistani communication sector alone received $1.62 billion in Foreign Direct Investment (FDI) – about 30% of the country's total foreign direct investment.

Present growth of state-of-the-art infrastructures in the telecoms sector during the last four years has been the result of the PTA's vision and implementation of the deregulation policy. Paging and mobile (cellular) telephones were adopted early and freely. Cellular phones and the Internet were adopted through a rather laissez-faire policy with a proliferation of private service providers that led to the fast adoption. With a rapid increase in the number of Internet users and ISPs, and a large English-speaking population, Pakistani society has seen an unparalleled revolution in communications.

According to the PC World,^[184] a total of 6.37 billion text messages were sent through Acision messaging systems across Asia Pacific over the 2008/2009 Christmas and New Year period. Pakistan was amongst the top five ranker with one of the highest SMS traffic with 763 million messages. On 14 August 2010, Pakistan became the first country in the world to experience EVDO's RevB 3G technology that offers maximum speeds of 9.3 Mbit/s. 3G and 4G was simultaneously launched in Pakistan on 23 April 2014 through a SMRA Auction. Three out of Five Companies got a 3G licence i.e. Ufone, Mobilink and Telenor while China Mobile's Zong got 3G as well as a 4G licence. Whereas fifth company, Warid Pakistan did not participate in the auction procedure, But they launched 4G LTE services on their existing 2G 1800 MHz spectrum due to Technology neutral terms and became world's first Telecom Company to transform directly from 2G to 4G. With that Pakistan joined the 3G and 4G world. In December 2017, 3G and 4G subscribers in Pakistan reached to 46 millions.^[178]

Pakistan is ranked 4th in terms of broadband Internet growth in the world, as the subscriber base of broadband Internet has been increasing rapidly. The rankings are released by Point Topic Global broadband analysis, a global research centre.^[185]

• Pakistan has more than 20 million Internet users in 2009.^[186] The country is said to have a potential to absorb up to 50 million mobile phone Internet users in the next 5 years thus a potential of nearly 1 million connections per month.
• Almost all of the main government departments, organisations and institutions have their own websites.
• The use of search engines and instant messaging services is also booming. Pakistanis are some of the most ardent chatters on the Internet, communicating with users all over the world. Recent years have seen a huge increase in the use of online marriage services, for example, leading to a major re-alignment of the tradition of arranged marriages.
• Biometric reverification of SIMs in 2015 had an adverse impact on the cellular subscriber base when subscribers count dropped from 139.9 million to 114.6 million. However, the industry has survived through the tough period and continues to regain subscribers at a fast pace.

According to the report released by PTA for the FY 2017–18 :-^[187]

• Total teledensity of Pakistan reached at 74.4%.
• Telecom revenues were reached to Rs. 488.8 billion.
• Total contribution of telecom sector to the national exchequre was RS. 147.2 billion.
• Investment came to the telecom sector was US$670.3 million.

(As of June 2018) there were four cell phone companies including PMCL(Jazz), Telenor, Ufone and Zong operating in the country with nearly 150.2 million mobile phone subscribers.^[188]

Pakistan Telecommunication Authority released the figures in June 2018 that Broadband subscribers in the country reached to approximately 56.1 millions thus gaining the growth of over 18 fold since 2006.^[188]

Transportation

Pakistan International Airlines, the flagship airline of Pakistan's civil aviation industry, has turnover exceeding $25 billion in 2015.^[189] The government announced a new shipping policy in 2006 permitting banks and financial institutions to mortgage ships.^[190] Private sector airlines in Pakistan include Airblue, which serves the main cities within Pakistan in addition to destinations in the Persian Gulf and Manchester in the United Kingdom. The other private carrier is Shaheen Air International whose network covers the main cities of Pakistan and the Persian Gulf.

A massive rehabilitation plan worth $1 billion over five years for Pakistan Railways has been announced by the government in 2005.^[191] A new rail link trial has been established from Islamabad to Istanbul, via the Iranian cities of Zahedan, Kerman and Tehran. It is expected to promote trade, tourism, especially for exports destined for Europe (as Turkey is part of Europe and Asia).^[192][193]

Finance

Pakistan has a large and diverse banking system. In 1974, a nationalization program led to the creation of six government-owned banks.^[194] A privatization program in the 1990s lead to the entry of foreign-owned and local banks into the industry.^[194] As of 2010, there were five public-owned commercial banks in Pakistan, as well as 25 domestic private banks, six multi-national banks and four specialized banks.^[194]

Since 2000 Pakistani banks have begun aggressive marketing of consumer finance to the emerging middle class, allowing for a consumption boom (more than a 7-month waiting list for certain car models) as well as a construction bonanza. Pakistan's banking sector remained remarkably strong and resilient during the world financial crisis in 2008–09, a feature which has served to attract a substantial amount of FDI in the sector. Stress tests conducted on June 2008 data indicate that the large banks are relatively robust, with the medium and small-sized banks positioning themselves in niche markets.

The Pakistan Bureau of Statistics provisionally valued this sector at Rs.807,807 million in 2012 thus registering over 510% growth since 2000.^[195]

An article published in Journal of the Asia Pacific Economy by Mete Feridun of University of Greenwich in London with his Pakistani colleague Abdul Jalil presents strong econometric evidence that financial development fosters economic growth in Pakistan.^[196]

Housing

The property sector has expanded twenty-threefold since 2001, particularly in metropolises like Lahore.^[197] Nevertheless, the Karachi Chamber of Commerce and Industry estimated in late 2006 that the overall production of housing units in Pakistan has to be increased to 0.5 million units annually to address 6.1 million backlog of housing in Pakistan for meeting the housing shortfall in next 20 years. The report noted that the present housing stock is also rapidly aging and an estimate suggests that more than 50% of stock is over 50 years old. It is also estimated that 50% of the urban population now lives in slums and squatter settlements. The report said that meeting the backlog in housing, besides replacement of out-lived housing units, is beyond the financial resources of the government. This necessitates putting in place a framework to facilitate financing in the formal private sector and mobilise non-government resources for a market-based housing finance system.^[198]

The Pakistan Bureau of Statistics provisionally valued this sector at Rs.459,829 million in 2012 thus registering over 149% growth since 2006.^[195]

Minor sectors

The Pakistan Bureau of Statistics provisionally valued this sector at Rs.389,545 million in 2005 thus registering over 65% growth since 2000.^[199] The Pakistan Bureau of Statistics provisionally valued this sector at Rs.631,229 million in 2005 thus registering over 78% growth since 2000.^[199] The Pakistan Bureau of Statistics provisionally valued this sector at Rs.1,358,309 million in 2005 thus registering over 96% growth since 2000. The wholesale and retail trade is the largest sub-sector of the services. Its share in the overall services sector is estimated at 31.5 percent. The wholesale and retail trade sector is based on the margins taken by traders on the transaction of commodities traded. In 2012–13, this sector grew at 2.5 percent as compared to 1.7 percent in the previous year.

Energy

For years, the matter of balancing Pakistan's supply against the demand for electricity has remained a largely unresolved matter. Pakistan faces a significant challenge in revamping its network responsible for the supply of electricity. While the government claims credit for overseeing a turnaround in the economy through a comprehensive recovery, it has just failed to oversee a similar improvement in the quality of the network for electricity supply. Most cities in Pakistan receive substantial sunlight throughout the year, which would suggest good conditions for investment in solar energy. If the rich people in Pakistan are shifted to solar energy that they should be forced to purchase solar panels, the shortfall can be controlled. this will make the economy boost again as before 2007. According to an econometric analysis published in Quality & Quantity by Mete Feridun of University of Greenwich and his colleague Muhammad Shahbaz, economic growth in Pakistan leads to electricity consumption but not vice versa.^[200]

.^[201]

Chemicals and pharmaceuticals

Foreign trade, remittances, aid, and investment

Investment

Foreign investment had significantly declined by 2010, dropping by 54.6% due to Pakistan's political instability and weak law and order, according to the Bank of Pakistan.^[202]

Business regulations have been overhauled along liberal lines, especially since 1999. Most barriers to the flow of capital and international direct investment have been removed. Foreign investors do not face any restrictions on the inflow of capital, and investment of up to 100% of equity participation is allowed in most sectors. Unlimited remittance of profits, dividends, service fees or capital is now the rule. However, doing business has been becoming increasingly difficult over the past decade due to political instability, rising domestic insurgency and insecurity and vehement corruption. This can be confirmed by the World Bank's Ease of Doing Business Index report degrading its ratings for Pakistan each year since September 2009.

Tariffs have been reduced to an average rate of 16%, with a maximum of 25% (except for the car industry). The privatization process, which started in the early 1990s, has gained momentum, with most of the banking system privately owned, and the oil sector targeted to be the next big privatization operation.

The recent improvements in the economy and the business environment have been recognised by international rating agencies such as Moody's and Standard and Poor's (country risk upgrade at the end of 2003). 47.1% increase in Net FDI in 2014–2015 (July–October) as compared to 2013–14 (July–October).^[203]

Foreign acquisitions and mergers

With the rapid growth in Pakistan's economy, foreign investors are taking a keen interest in the corporate sector of Pakistan. In recent years, majority stakes in many corporations have been acquired by multinational groups.

• PICIC by Singapore-based Temasek Holdings for $339 million
• Union Bank by Standard Chartered Bank for $487 million
• Prime Commercial Bank by ABN Amro for $228 million
• PakTel by China Mobile for $460 million
• PTCL by Etisalat for $1.8 billion
• Additional 57.6% shares of Lakson Tobacco Company acquired by Philip Morris International for $382 million
• In 2016, Arçelik acquired Dawlance for $243 million.^[204]
• In 2016, FrieslandCampina acquired 51% stake in Engro Foods for $446.81 million.^[205]
• In 2016, The Abraaj Group sold its 66.4% stake in K-Electric to Shanghai Electric for $1.77 billion.^[206]

The foreign exchange receipts from these sales are also helping cover the current account deficit.^[207]

Foreign trade

Pakistan witnessed the highest export of US$25.1 billion in the FY 2013-14. However, in subsequent years exports have declined considerably. This declined started from financial year 2014-15 when an international commodity slump set in. This was compounded by structural supply side constraints including energy shortages, high input costs and an overvalued exchange rate. From financial year 2014 to 2016, exports declined by 12.4 percent. Exports growth trend over this period was similar to the world trade growth patterns. Pakistan's external sector continued facing stress during 2016–17. But still Pakistan's merchandise trade exports grew by 0.1 percent during the fiscal year 2016–17. The imports continued to grow at a much faster rate and grew by a large percentage of 18.0 during the FY 2017 as compared to the previous year.^[208] World imports had been stagnant between 2011 and 2014 but registered significant drop since early 2015 because of weak commodity and product prices and weak global economic activity. Economic growth was lacklustre in the OECD countries which contributed to the slowdown in China . Furthermore, the ratio between real growth in world imports and world real GDP growth substantially declined. This decline in the import content of economic activity triggered a shift in consumption worldwide from traded towards non-traded goods, import substitution, a slowdown in the pace of trade liberalization, and gave currency to protectionist measures. A bulk of Pakistan's exports are directed to the OECD region and China. Historical data suggest strong correlation between Pakistani exports to imports in OECD and China. As per FY 2016 data, more than half of country's exports are shipped to these two destinations i.e. OECD and China. A decline in Pakistan overall exports,thus occurred in this backdrop.^[209]

Pakistan's imports are showing rising trend at a relatively faster rate due to the increased economic activity as part of China Pakistan Economic Corridor (CPEC), particularly in the Energy sector. The construction projects under CPEC require heavy machinery that has to be imported. It is also observed that the economy is currently being led both by investments as well as consumption, resulting in relatively higher levels of imports. During FY 2018 Pakistan's exports picked up and reached to US$24.8 billion showing a growth of 12.6 percent over previous year FY 2017. Imports on the other hand also increased by 16.2 percent and touched the highest figure of US$56.6 billion. As a result, the trade deficit widened to US$31.8 billion which was the highest since last ten years. Pakistan major exports commodities for the last five fiscal years are listed in the table below:

Commodities	FY 2015 (million US $)	FY 2016 (million US $)	FY 2017 (million US $)	FY 2018 (million US $)	FY 2019 (million US $)
Cotton Cloth	2486.783	2,331.587	2,123.042	2,175.950	2,171.299
Knitwear	2264.114	2,309.248	2,334.599	2,615.135	2,840.402
Ready-made Garments	2044.018	2,156.033	2,279.450	2,477.117	2,566.252
Bed wear	2207.477	2,126.360	2,156.753	2,345.985	2, 343.209
Rice	2037.841	1,852.708	1,574.950	1,933.133	2,091.260
Cotton Yarn	1818.196	1,266.127	1,140.214	1,248.940	1,200.041
Chemical and Pharmaceutical Products	1249.959	1,052.316	1,113.300	1,389.571	1, 222.956

Pakistan major imports commodities for the last five fiscal years are listed in the table below:-^[210]

Commodities	FY 2015 (million US $)	FY 2016 (million US $)	FY 2017 (million US $)	FY 2018 (million US $)	FY 2019 (million US $)
Petroleum products	7,773.620	5,098.139	6,379.880	6,768.304	6,030.526
Petroleum crude	4,393.223	2,569.696	2,764.648	4,310.250	4,914.950
Iron and Steel	1,813.412	2,094.016	1980.112	2,523.343	2,006.834
Plastic material	1,771.758	1,791.303	1,875.104	2,311.933	2,271.895
Electrical Machinery & Apparatus	935.290	1,650.692	1,317.167	1,800.559	1,287.970
Palm oil	1,681.170	1,600.041	1,775.118	1,908.304	1,661.444
Power Generating Machinery	897.940	1,356.328	1,336.598	1,576.616	731.226
Road vehicles	1,024.972	1,263.807	1,774.141	2,182.379	1,934.413
Telecom	1,225.078	1,201.062	1,023.021	1,396.777	1,172.472
Liquefied natural gas	135.232	578.924	1,270.680	2,035.506	2,871.909

External imbalances

During FY 2017, the increase in imports of capital equipment and fuel significantly put pressure on the external account. A reversal in global oil prices led to increase in POL imports, accompanied by falling exports, as a result the merchandised trade deficit grew by 39.4 percent to US$26.885 billion in FY 2017. While remittances and Coalition Support Fund inflows both declined slightly over the same period last year, however, the impact was offset by an improvement in the income account, mainly due to lower profit repatriations by oil and gas firms.^[209]

Current account – The Current account deficit increased to US$12.4 billion in FY 2017, against US$3.2 billion in FY 2016.^[211]

However, the impact of high current deficit on foreign exchange reserves was not severe, as financial inflows were available to the country to partially offset the gap; these inflows helped ensure stability in the exchange rate. Net FDI grew by 12.4 percent and reached US$1.6 billion in the nine-months period, whereas net FPI saw an inflow of US$631 million, against an outflow of US$393 million last year. Encouragingly for the country, the period saw the completion of multiple merger and acquisition deals between local and foreign companies. Moreover, multiple foreign automakers announced their intention to enter the Pakistani market, and some also entered into joint ventures with local conglomerates. This indicates that Pakistan is clearly on foreign investors' radar, and provides a positive outlook for FDI inflows going forward. government's successful issuance of a US$1.0 billion Sukuk in the international capital market, at an extremely low rate of 5.5 percent. Besides, Pakistan continued to enjoy support from international financial institutions (IFIs) like the World Bank and Asian Development Bank, and from bilateral partners like China , in the post-EFF period: net official loan inflows of US$1.1 billion were recorded during the period. As a result, the country's FX reserve amounted to US$20.8 billion by 4 May 2017 sufficient to finance around four month of import payments.^[209]

Economic aid

Pakistan receives economic aid from several sources as loans and grants. The International Monetary Fund (IMF), World Bank (WB), Asian Development Bank (ADB), etc. provide long-term loans to Pakistan. Pakistan also receives bilateral aid from developed and oil-rich countries. Foreign aid has been one of the main sources of money for the Pakistani Economy. Collection of Foreign aid has been one of the priorities of almost every Pakistani Government with the Prime Minister himself leading delegations on a regular basis to collect Foreign aid.^[212][213]

The Asian Development Bank will provide close to $6 billion development assistance to Pakistan during 2006–9.^[214] The World Bank unveiled a lending programme of up to $6.5 billion for Pakistan under a new four-year, 2006–2009, aid strategy showing a significant increase in funding aimed largely at beefing up the country's infrastructure.^[215] Japan will provide $500 million annual economic aid to Pakistan.^[216] In November 2008, the International Monetary Fund (IMF) has approved a loan of 7.6 billion to Pakistan, to help stabilise and rebuild the country's economy. Between the 2008 and 2010 fiscal years, the IMF extended loans to Pakistan totalling 5.2 billion dollars.^[217] The government decided in 2011 to cut off ties with the IMF. However the government newly elected in 2013 re-established these ties, and a negotiated a three-year $6.6 billion package which would allow it to deal with on-going debt issues.^[218] In May 2019, Pakistan finalised a US$6 billion foreign aid with IMF.^[219] This is Pakistan's 22nd such bailout from the IMF.^[220]

The China–Pakistan Economic Corridor is being developed with a contribution of mainly concessionary loans from China under the Belt and Road Initiative. Much like BRI, value of CPEC investments transcends any fiat currency and is only estimated vaguely as it spans over decades of past and future industrial development and global economic influence.

Remittances

The remittances of Pakistanis living abroad has played important role in Pakistan's economy and foreign exchange reserves. The Pakistanis settled in Western Europe and North America are important sources of remittances to Pakistan. Since 1973 the Pakistani workers in the oil rich Arab states have been sources of billions of dollars of remittances.

The 9 million-strong Pakistani diaspora, contributed US$19.3 billion to the economy in FY2017.^[221] The major source countries of remittances to Pakistan include UAE, US, Saudi Arabia, GCC countries (including Bahrain, Kuwait, Qatar and Oman), Australia, Canada, Japan, Norway, Switzerland, UK and EU countries.

Remittances sent home by overseas Pakistani workers have seen a negative growth of 3.0% in the fiscal year 2017 compare to previous year when remittances reached at all-time high of 19.9 billion US dollars. This decline in remittances is mainly due to the adverse economic conditions of Arabian and gulf countries after the fall in oil prices in 2016. However, the recent development activities in the Qatar FIFA World Cup, Dubai Expo, Saudi Arabia's implementation of its Vision 2030 and particularly the recent visit of the P.M to Kuwait should all be helpful in opening new avenues for employment in these countries . Going forward one can expect improvements in the coming years.

Remittances sent home by overseas Pakistanis in the fiscal year 2016/17 are as under:^[208]

Country	[Million USD]
USA	2,443.54
UK	2,338.34
Saudi Arabia	5,469.77
UAE	4,309.88
Template:Country data Gulf Cooperation Council	2,324.06
European Union	482.59
Norway	41.31
Switzerland	26.34
Australia	204.31
Canada	187.22
Japan	14.31
Other countries	1,461.91

Government finances

Fiscal budget summary (FY2017/18)^[222]

• Fiscal year: 1 July – 30 June
• Budget outlay: Rs 5,013.8 billion rupees
• Revenues collection estimated: 4,713.7 billion rupees
• Expenditures estimated: 5,103.8 billion rupees
• Bank borrowing estimated: 390.1 billion rupees

Revenues and taxation

Pakistan has a low tax/GDP ratio, which it is trying to improve. The current tax-to-GDP ratio is 12.6% (2016),^[223] which is a little less than its neighbour India 16.6% (2016) ^[224] while a slight more than Sri Lanka 12.3% (2015).^[225] The pace of revenue mobilization has witnessed an upward trajectory since FY 2013. Overall revenues increased to 15.3 percent of GDP in FY 2016, compared to 13.3 percent of GDP recorded in FY 2013. Among those, tax revenues increased from 9.8 percent of GDP in FY 2013 to 12.6 percent of GDP in FY 2016.

Expenditures

Government expenditures were 4,383.6 billion rupees (FY 2016–2017 July to March). Total expenditures witnessed a downward trajectory without compromising the expenditures on development projects and social assistance. Particularly, expenditures under Public Sector Development Program (PSDP) have been raised adequately in order to meet the investment requirements. During FY 2017 the size of federal PSDP has increased to Rs 800 billion from Rs 348.3 billion during FY 2013, showing a cumulative increase of over 129 percent. During first nine months of current fiscal year, the fiscal deficit stood at 3.9 percent of GDP against 3.5 percent of GDP recorded in the same period of FY 2016 on account of higher development expenditures along with various tax incentives to promote investment and economic activity in the country and security related expenditures. On the basis of previous estimates of GDP at Rs 33,509 billion, the fiscal deficit was recorded at 3.7 percent during first nine months of current fiscal year against 3.4 percent registered in the comparable period of FY 2016. Total revenues grew at 6.2 percent to Rs 3,145.5 billion during July–March, FY 2017 against Rs 2,961.9 in the comparable period of FY 2016.^[223]

Income distribution

• GINI Index: 41
• Household income or consumption by percentage share:
  • lowest 10%: 4.1%
  • highest 10%: 27.7% (1996)
  • middle 10%: 10.4%

See also

By province and administrative unit:

• Economy of Azad Kashmir
• Economy of Balochistan, Pakistan
• Economy of Khyber Pakhtunkhwa
• Economy of Punjab, Pakistan
• Economy of Sindh
• Economy of Karachi
• Economy of Islamabad
• Economy of Lahore
• Economy of Faisalabad
• Economy of Rawalpindi

Other

• Foreign trade of Pakistan
• Ministry of Finance (Pakistan)
• 2019–20 Pakistan federal budget
• Agriculture in Pakistan
• Economic effects of 2010 Pakistan floods
• Consensus Economics
• Economic forecasting
• Economic history of Pakistan
• Industry of Pakistan
• List of Pakistani Districts by Human Development Index
• List of Pakistani provinces by gross domestic product
• List of Pakistanis by net worth
• List of tariffs in Pakistan
• Ministry of Commerce (Pakistan)
• Pakistan Board of Investment
• Prize Bonds
• Science and technology in Pakistan
• Trade Development Authority of Pakistan
• Trading Corporation of Pakistan
• Economy of the OIC

References

Bibliography

• Khan Ashan (2014). Economics of Pakistan, 9th edition. Pakistan. 

Further reading

External links

• Statistics Division, Government of Pakistan
• Ministry of Finance, Government of Pakistan
• Ministry of Commerce, Government of Pakistan
• World Bank Summary Trade Statistics Pakistan
• "Pakistan". The World Factbook. Central Intelligence Agency. https://www.cia.gov/library/publications/the-world-factbook/geos/pk.html. 
• Tariffs applied by Pakistan as provided by ITC's Market Access Map, an online database of customs tariffs and market requirements

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