Economy of Pakistan

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Economy of Pakistan

Karachi, the financial centre of Pakistan
Currency	Pakistani rupee (PKR) Rs.1 = 100 [1]Paisas 1 USD = 105.4250 PKR (July 2017) [2]
Fiscal year	1 July – 30 June
Trade organisations	WTO, SAARC, ECO, OIC, SAFTA, AIIB, SCO, IMF, Commonwealth of Nations, World Bank.
Statistics
GDP	31862.167 Billion Rupees Or 304.327 Billion US$ (Nominal, 2017) [3] 1.060 Trillion US$ (PPP, 2017) [4]
GDP rank	25th (PPP, 2017) 42nd (Nominal, 2015)
GDP growth	5.28% [5]
GDP per capita	$1,629 (nominal; 150th;2016) $5,374 (PPP; 133rd; 2016)[6]
GDP by sector	agriculture: 19.53%, industry: 20.88%, services: 59.59% (2017 est.) [7]
Inflation (CPI)	General: 3.4%, Food: 1.3%, Non Food: 5.0 (August 2017) [8]
Population below poverty line	6.6% (2017)
Labour force	61.04 million (2015–16)[9]
Labour force by occupation	agriculture: 42.3%, []: 15.2%, manufacturing: 7.31%, wholesale and retail: 9.2%, transport and communication: 7.3% (2012–13)[10]
Unemployment	3.5% (2017 est.)[11]
Main industries	textiles and apparel, food processing, pharmaceuticals, construction materials, chemicals, cement, mining, machinery, steel, engineering, software and hardware, automobiles, motorcycle and auto parts, electronics, paper products, fertiliser, shrimp, defence products, shipbuilding
Ease-of-doing-business rank	144th (2017)[12]
External
Exports	Total $27.2 billion, Goods $21.659 billion, Services $5.554 billion (2016–17 est.)
Export goods	Textiles ($12,546 million) Vegetable Products ($2,409 million) Mineral ($1,082 million) Leather ($1,000 million) Food and Beverages ($802 million) [13]
Main export partners	United States 17%  China 8%  United Arab Emirates 4%  Afghanistan 6%  United Kingdom 8%  Germany 6% [14]
Imports	Total $51.768 billion, Goods $43.490 billion, Services $8.277 billion (2016–17 est.) [15]
Import goods	Food $558.9 million Machinery $6414.6 million Transport Vehicles $2361.0 million Textile $3381.8 million Fertilizers and other chemicals $4793.4 billion Refined Petroleum $4846.0 million Crude Petroleum $1840.7 million
Main import partners	China 28%  United Arab Emirates 14%  Kuwait 3% (2017 est.)  Saudi Arabia 4%  Malaysia 2% [16]
Public finances
Public debt	59.4% of GDP (March 2017)[17]
Revenues	15.4% of GDP, Pkr 4936.7 Billion or $47 billion(FY 2017) [18]
Expenses	21.3% of GDP, Pkr 6800.5 Billion or $65 billion(FY 2017) [19]
Credit rating	Standard & Poor's:[20] B (Domestic) B (Foreign) B (T&C Assessment) Outlook: Positive[21] Moody's: B2[22] Outlook: Stable
Foreign reserves	$14 Billion (September 2017)[23]
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 207 million ^[24] (the world's 6th-largest), giving it a nominal GDP per capita of $1,629,^[25] which ranks 147th in the world for 2016. 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.^[26] Pakistan is a developing country^[27][28][29] and is one of the Next Eleven, the eleven countries and have a potential to be among the world's large economies in the 21st century.^[30] However, after decades of war and social instability, as of 2013, serious deficiencies in basic services such as railway transportation and electric power generation had developed,^[31] the economy is semi-industrialized, with centres of growth along the Indus River.^[32][33][34] Primary export commodities include textiles, leather goods, sports goods, chemicals, carpets/rugs and medical instruments.^[35][36]

Growth poles of Pakistan's economy are situated along the Indus River;^[33][37] the diversified economies of Karachi and major urban centers in the Punjab, coexisting with lesser developed areas in other parts of the country.^[33] The economy has suffered in the past from internal political disputes, a fast-growing population, mixed levels of foreign investment.^[31] 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.^[38] Pakistan is currently undergoing a process of economic liberalization, including privatization of all government corporations, aimed to attract foreign investment and decrease budget deficit;^[39] in 2014, foreign currency reserves crossed $18.4 billion^[40] which has led to stable outlook on the long-term rating by Standard & Poor's.^[41][42] In 2016, BMI Research report named Pakistan as one of the ten emerging economies with a particular focus on of its manufacturing hub.^[43]

In October 2016, the IMF chief Christine Lagarde confirmed her economic assessment in Islamabad that Pakistan's economy was 'out of crisis'^[44] The World Bank predicts 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.^[45] According to the World Bank, poverty in Pakistan fell from 64.3% in 2002 to 29.5% in 2014.^[46] Pakistan's fiscal position continues to improve as the budget deficit has fallen from 6.4% in 2013 to 4.3% in 2016.^[47][48] The country's improving macroeconomic position has led to Moody's upgrading Pakistan's debt outlook to "stable".^[49]

In 2017, Pakistan's GDP in terms of purchasing power parity crossed $1 trillion.^[50]

Economic history[edit]

First five decades[edit]

Pakistan was a very poor 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^[51] 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.^[52]

Recent decades[edit]

This is a chart of trend of gross domestic product of Pakistan at market prices estimated^[53] by the International Monetary Fund with figures in millions of Pakistani Rupees. See also^[52]

Year	Gross Domestic Product	US Dollar Exchange	Inflation Index (2000=100)	Per Capita Income (as % of US)
1947	2,058	1 Pakistani Rupee		−1.08
1951	10,029	1 Pakistani Rupee		1.72
1960	20,058	4.76 Pakistani Rupees		3.37
1965	31,740	4.76 Pakistani Rupees		3.40
1970	51,355	4.76 Pakistani Rupees		3.26
1975	131,330	9.91 Pakistani Rupees		2.36
1978	283,460	9.97 Pakistani Rupees	21	2.83
1985	569,114	16.28 Pakistani Rupees	30	2.07
1990	1,029,093	21.41 Pakistani Rupees	41	1.92
1995	2,268,461	30.62 Pakistani Rupees	68	2.16
2000	3,826,111	51.64 Pakistani Rupees	100	1.54
2005	6,581,103	59.86 Pakistani Rupees	126	1.71
2014	25,068,059	105.95 Pakistani Rupees	260
2016	29,812,761	104.55 Pakistani Rupees	370	2.71

Economic resilience[edit]

Background[edit]

Historically, Pakistan's overall economic output (GDP) has grown every year since a 1951 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";^[54]
• 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[edit]

According to many sources, the Pakistani government has made substantial economic reforms since 2000,^[55] 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."^[56]

Doing business[edit]

The World Bank (WB) and International Finance Corporation's flagship report Ease of Doing Business Index 2017 ranked Pakistan 144 among 190 countries around the globe. The top five countries were New Zealand, Singapore, Hong Kong, Denmark and South Korea.^[57]

Many Western companies refuse to do business with Pakistan, citing problems of corruption, lack of resources and lack of infrastructure as key problems.^[58]

The economy today[edit]

Today the Nominal GDP of Pakistan is 304.327 billion USD which is better than its last decades performance due to high growth rate

Economic indicators of Pakistan (2000–2017)[edit]

These are economic indicators of Pakistan from Fiscal Year 2000 to 2017.

Gross domestic product (GDP)[edit]

Note: The "gross domestic product growth rate" is calculated in local currency.

Index	List	2000s	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
1	Nominal GDP (billion US dollars)  [3]	81.994	107.751	120.055	137.264	152.385	177.077	168.152	177.406	213.755	224.646	231.430	244.692	270.922	279.201	304.327
1(a)	Real GDP growth rate  [59]	3.91%	7.70%	7.52%	5.56%	5.54%	4.99%	0.36%	2.58%	3.62%	3.84%	3.68%	4.05%	4.06%	4.51%	5.28%

Manufacturing sector[edit]

Index	List	2000s	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
2	Manufacturing sector growth rate  [59]	1.53%	16.38%	16.03%	9.39%	9.03%	6.10%	-4.18%	1.37%	2.50%	2.08%	4.85%	5.65%	3.88%	3.66%	5.27%

Agricultural sector[edit]

Index	List	2000s	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
3	Agriculture sector growth rate  [59]	6.09%	2.85%	7.02%	1.27%	3.42%	1.81%	3.50%	0.23%	1.96%	3.62%	2.68%	2.50%	2.13%	0.27%	3.46%
(a)	Wheat production (million tons)  [25]	20.8	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	25.8
(b)	Rice production (million tons)  [25]	5.2	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
(c)	Sugarcane production (million tons)  [25]	50.4	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	73.6
(d)	Cotton production (million bales)  [25]	11.6	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

Commodity producing sector growth rate[edit]

Index	List	2000s	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
4	Commodity producing sector growth rate  [59]	3.02%	9.23%	6.78%	2.38%	5.48%	5.05%	-0.88%	1.76%	3.21%	3.09%	1.73%	3.49%	3.63%	3.03%	4.26%

Service sector[edit]

Index	List	2000s	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
5	Service sector growth rate  [59]	4.79%	6.45%	8.14%	8.20%	5.58%	4.94%	1.33%	3.21%	3.94%	4.40%	5.13%	4.46%	4.36%	5.55%	5.98%

Per capita income[edit]

Index	List	2000s	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
6	Per capita income (US dollars)  [25]	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	1628.8

Consumer price index (CPI) growth rate[edit]

Index	List	2000s	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
7	Consumer price index growth rate  [25]	7.3%	4.6%	9.3%	7.9%	7.8%	12.0%	17.0%	10.1%	13.7%	11.0%	7.4%	8.6%	4.5%	2.9%	4.1%

←===Government revenues and expenditures===

Index	List	2000s	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
8	Government total revenue (billion rupees)  [60][61][62][63]	—	760.9	875.3	1022.7	1214.0	1398.9	1679.3	2051.9	2235.9	2566.5	2982.4	3637.3	3931.0	4447.0	4936.7
9	Government total expenditures (billion rupees)  [60][61][62][63]	—	773.1	866.7	1072.2	1234.1	1771.5	1887.1	2333.7	2498.5	3936.2	4816.3	5026.0	5387.8	5796.3	6800.5
10	Fiscal balance (billion rupees)  [60][61][62][63]	—	– 12.2	+ 8.6	– 49.5	– 20.1	– 372.6	– 207.8	– 281.8	– 262.6	– 1369.7	– 1833.9	– 1388.7	– 1456.7	– 1349.3	– 1863.8
11	Total revenue as % of GDP  [25]	—	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%	15.4%
12	Total expenditures as % of GDP  [25]	—	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%
13	Fiscal Deficit as % of GDP  [64][65]	—	—	—	4.0%	4.1%	7.3%	5.2%	6.2%	6.5%	8.8%	8.2%	5.5%	5.3%	4.6%	5.8%

Government debt and liabilities[edit]

Index	List	2000s	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(March)
14	Net Public Debt (Billion Rupees)  [2][66][67][68][69][70]	–	3914.8	4160.4	4480.5	4980.1	6067.5	7,835.5	9,232.2	11,992.7	13,568.3	15,355.8	16,063.6	16,692.4	18,385.7	18,925.4
15	Net Public Debt To GDP  [2][66][67][68][69][70]	–	63.1	58.3	54.5	53.9	57.0	61.5	62.2	58.1	59.2	62.7	65.4	56.4	54.9	59.4
16	Total External Debt (Billion US dollars)  [71][72][73]	–	33.3	34.0	35.7	38.7	40.7	46.4	49.8	55.3	53.5	48.1	51.3	50.9	57.7	58.4
17	Total External Debt To GDP  [2][71][72][73]	–	32.3	29.6	26.9	25.4	26.1	28.6	28.7	26.0	25.2	21.4	20.1	18.9	20.8	19.2

Overall deficit as % of GDP[edit]

Index	List	2000s	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
18	Overall deficit as % of GDP  [25]	4.4%	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%	3.9%

PSE 100 index growth rate[edit]

Index	List	2000s	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
19	PSE 100 index growth rate  [25]	27.2%	55.2%	41.1%	34.1%	37.9%	-10.8%	-41.7%	35.7%	28.5%	10.4%	52.2%	41.2%	16.0%	9.9%	27.5

Foreign trade[edit]

Index	List	2000s	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
20	USD to PKR exchange rates  [74][75]	51.7709	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
21	Exports of Pakistan (billion US dollars)  [76][77][78][74]	–	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	21.660
22	Exports growth rate  [76][77][78][74]	–	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%	-1.4%
23	Imports of Pakistan (billion US dollars)  [76][77][78][74]	–	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	48.545
24	Imports growth rate  [79][78][77][74]	–	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%	17.7%
25	Trade deficit (billion US dollars)  [79][78][77][74]	–	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	26.885
26	Trade deficit as % of GDP  [25]	3.9%	1.2%	4.0%	6.5%	6.2%	8.8%	7.5%	6.5%	4.9%	7.0%	6.6%	6.8%	6.3%	6.6%	5.8%

Workers' remittances[edit]

Index	List	2000s	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
27	Workers' remittances (billion US dollars )  [80]	–	–	–	4.6	5.4	6.4	7.8	8.9	11.2	13.1	13.9	15.8	18.7	19.9	19.3
28	Workers' remittances growth rate  [25]	26.8%	-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%	-3.0%

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. [15]

Stock market[edit]

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".^{[82][citation needed]} The stock market capitalisation of listed companies in Pakistan was valued at $5,937 million in 2005 by the World Bank,^[83] 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,^[84] 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.^[85] 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.^[86] 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.^[87] However, on 28 July 2017 after the Panama case verdict by Supreme Court of Pakistan which resulted in the dismissal of PM Nawaz Sharif adversely affected the market and now in September 2017 the PSE-100 index came back at 41000 points.^[88]

Middle class[edit]

As of 2013, according to Macro Economic Insights, a research firm in Islamabad, the size of the Pakistani middle class is conservatively estimated at approximately 70 million, out of a total population of about 186 million, this represents 40% of the population of the country.^[89]

On measures of income inequality, the country ranks slightly better than the median. In late 2006, the Central Board of Revenue estimated that there were almost 2.8 million income-tax payers in the country.^[90] However, by 2013, the number of taxpayers was drastically reduced to just 768,000 out of a total population of 190 million, meaning that only 0.57% of the population pay taxes^[91]

Poverty levels have decreased by 10% since 2001^[92] Foreign companies selling to the Pakistani middle classes have been very successful, for example, demand for Unilever products have recently been so high that even after doubling production the Anglo-Dutch company struggled to meet demand and its chairman stated "Pakistanis can’t seem to have enough".^[93]

Poverty alleviation expenditures[edit]

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.^[95] Rural poverty remains a pressing issue, as development there has been far slower than in the major urban areas.

Employment[edit]

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.^[96] Significant progress in taxation and business reforms has ensured that many firms now are not compelled to operate in the underground economy.^[97]

In late 2006, the government launched an ambitious nationwide service employment scheme aimed at disbursing almost $2 billion over five years.^[98][99]

Mean wages were $0.98 per man-hour in 2009. Rate of unemployment is 15%.

High inflation and limited wage growth have drawn more women into the workforce to feed their families.^[100]

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.^[101]

Tourism[edit]

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.^[102] As of 2016 tourism has begun to recover in Pakistan, albeit gradually.^[103]

Revenue[edit]

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 95% of the entire national revenue, the Federal Board of Revenue collected 3.370 trillion rupees in taxes against the target of 3.621 trillion rupees in the fiscal year 2016–2017. FBR achieved 8% growth in revenues over the previous fiscal year’s collection of Rs3.114 trillion.^[104]

Currency system[edit]

Rupee[edit]

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[edit]

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

PKR per US dollar 1995–2008

Year		Highest ↑			Lowest ↓
		Date	Rate		Date	Rate
1996			PKR 30.930
1997						PKR 35.266
1998			PKR 40.185
1999			PKR 44.550
2000			PKR 51.90
2001			PKR 53.6482
2002			PKR 61.9272
2003			PKR 59.7238
2005			PKR 57.752
2006			PKR 58.000
2009		05 Aug	PKR 60.75		01 Nov	PKR 60.50
2010		October 10	PKR 80.00		01 Apr	PKR 63.50
Source: PKR exchange rates in USD, SBP

Foreign exchange reserves[edit]

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 October 11, 2008, State Bank of Pakistan reported that the country's foreign exchange reserves had gone down by $571.9 million to $7749.7 million.^[105] The foreign exchange reserves had declined more by $10 billion to a level of $6.59 billion.

Structure of economy[edit]

The economy of Pakistan is suffering with high inflation rates well above 26%, over 1,081 patent applications were filed by non-resident Pakistanis in 2004 revealing a new-found confidence.^[106] 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).

Major sectors[edit]

Primary[edit]

Agriculture[edit]

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 2005, Pakistan produced 21,591,400 metric tons of wheat, more than all of Africa (20,304,585 metric tons) and nearly as much as all of South America (24,557,784 metric tons), according to the FAO.^[107] The country is expected to harvest 47 to 64 million tons of wheat in 2015. Pakistan has also cut the use of dangerous pesticides dramatically.^[108]

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 oilseed 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 24 percent of Gross Domestic Product (GDP) and accounts for half of employed labor force and is the largest source of foreign exchange earnings.^[109]

Pakistan's Top commodities by export value in 2011 were:^[110]

Commodity	Value [1000 USD]
Wheat	674424
Cotton lint	359341
Flour of Wheat	352014
Tangerines, mandarins, clem.	120893
Potatoes	102185
Cattle meat	71729
Maize	70028
Cotton Waste	65707
Dates	64081
Vegetables fresh nes	53136

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 23% of GDP and employs about 44% 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[edit]

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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. Except oil, gas and nuclear minerals regulated at federal level, minerals are a provincial subject, under the constitution of the Islamic Republic of Pakistan. Provincial governments are responsible for development and exploitation of minerals, besides, enforcing regulatory regime; in line with the constitutional framework the federal and provincial governments have jointly set out Pakistan's first National Mineral Policy in 1995, duly implemented by the provinces, providing appropriate institutional and regulatory framework and equitable and internationally competitive fiscal regime.

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 tones of reserves at Thar in the Sindh province has given an impetus to develop it as an alternate source of energy. There is vast potential for precious and dimension stones.

The enforcement of Mineral Policy (1995) has paved the way to expand mining sector activities and attract international investment in this sector. International mining companies have responded favorably to the NMP and presently at least four are engaged in mineral projects development.

Currently about 52 minerals are under exploitation although on small scale, the major production is of coal, rock salt and other industrial and construction minerals. The current contribution of the mineral sector to the GDP is about 0.5% and likely to increase considerably on the development and commercial exploitation of Saindak & Reco Diq copper and gold deposits (world's largest gold mine), Duddar zinc lead, Thar coal and gemstone deposits.

Secondary[edit]

Industry[edit]

Pakistan's industrial sector accounts for about 24% of GDP. Cotton textile production and apparel manufacturing are Pakistan's largest industries, accounting for about 66% of the merchandise exports and almost 40% of the employed labour force.^[111] Other major industries include cement, fertiliser, edible oil, sugar, steel, tobacco, chemicals, machinery, and food processing.

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^[112] 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.^[96]

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

Rank[113]	Name	Headquarters	Revenue (Mil. $)
01.	Pakistan State Oil	Karachi	13,094[114]
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[115]
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[116]
013.	Fauji Fertilizer Company Limited	Rawalpindi	754

Construction material[edit]

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 till 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.^[117] 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.^[118]

Information communication technology industry[edit]

The information communication technology (ICT) industry grossed over $4.8 billion in 2013. It is expected to exceed the $13 billion mark by 2018.^[119] 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.^[120] By 2009, Pakistan had improved its rank by ten places to reach 20th.^[121] According to Pakistan Startup report, there are about 1 million freelancers working from Pakistan mainly via elance, oDesk and freelancer – world's famous online market places that count Pakistan among top 5 freelancing nations.

Defence industry[edit]

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 per cent between the 2004–2008 and 2009–13, with China providing 54pc and the USA 27pc of Pakistan's imports.

Textiles[edit]

Most of the Textile Industry is established in Punjab. 10% of United States imports regarding clothing and other form of textiles is covered by Pakistan.^{[citation needed]}

Other[edit]

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.^[122][123]

Services[edit]

Pakistan's service sector accounts for about 53.3% of GDP.^[124] 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.

Communication[edit]

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;^[125] 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.^[126] As a result, Pakistan won the prestigious Government Leadership award of GSM Association in 2006.^[127]

The World Bank estimates that it takes about 3 days to get a phone connection in Pakistan.^[128]

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

1. Mobilink (Parent: VimpelCom Ltd., 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.^[129]

Since liberalisation, over the past four years,^[when?] the Pakistani telecom sector has attracted more than $9 billion in foreign investments.^[130] 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,^[131] 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 April 23, 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 July 2017, 3G and 4G subscribers in Pakistan reached at 43 million ^[125]

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.^[132]

• Pakistan has more than 20 million Internet users in 2009.^[133] 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.
• As of 2007 there were six cell phone companies operating in the country with nearly 90 million mobile phone users in the country.
• There were 140 million mobile phone users in Pakistan in 2014, eighth largest in the world.
• Wireless local loop and the landline telephony sector has also been liberalised and private sector has entered thus increasing the teledensity rate. In mid-2008, the Local Loop installed capacity reached around 5.5 million.^[134]
• Telecom industry created of 80,000 jobs directly and 500,000 jobs indirectly.

The Federal Bureau of Statistics provisionally valued this sector at Rs.982,353 million in 2005 thus registering over 91% growth since 2000.^[135]

Transportation[edit]

Pakistan International Airlines, the flagship airline of Pakistan's civil aviation industry, has turnover exceeding $25 billion in 2015.^[136] The government announced a new shipping policy in 2006 permitting banks and financial institutions to mortgage ships.^[137] 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.^[138] 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).^[139][140]

Finance[edit]

Pakistan's banking sector has 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. Banking sector turned profitable in 2002, their profits continued to rise for the next five years and peaked to Rs 84.1 ($1.1 billion) billion in 2006.

The credit card market continued its strong growth with sales crossing the 1 million mark in mid-2005,^[141] 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.

The Federal Bureau of Statistics provisionally valued this sector at Rs.311,741 million in 2005 thus registering over 166% growth since 2000.^[135]

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.^[142]

Housing[edit]

The property sector has expanded twenty-threefold since 2001, particularly in metropolises like Lahore.^[143] 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.^[144]

The Federal Bureau of Statistics provisionally valued this sector at Rs.185,376 million in 2005 thus registering over 49% growth since 2000.^[135]

Minor sectors[edit]

The Federal Bureau of Statistics provisionally valued this sector at Rs.389,545 million in 2005 thus registering over 65% growth since 2000.^[135] The Federal Bureau of Statistics provisionally valued this sector at Rs.631,229 million in 2005 thus registering over 78% growth since 2000.^[135] The Federal 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[edit]

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.^[145]

.^[146]

Chemicals and pharmaceuticals[edit]

Foreign trade, remittances, aid, and investment[edit]

Investment[edit]

Foreign direct investment (FDI) in Pakistan soared by 180.6 percent year-on-year to US$2.22 billion and portfolio investment by 276 per cent to $407.4 million during the first nine months of fiscal year 2006, the State Bank of Pakistan (SBP) reported on 24 April. During July–March 2005–06, FDI year-on-year increased to $2.224 billion from only $792.6 million and portfolio investment to $407.4 million, whereas it was $108.1 million in the corresponding period last year, according to the latest statistics released by the State Bank.^[147] Pakistan has achieved FDI of almost $8.4 billion in the financial year 06/07, surpassing the government target of $4 billion.^[148] 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.^[149]

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 when it ranked Pakistan (at 85th) well ahead of neighbours like China (at 89th) and India (at 133rd).^[150]

Pakistan is attracting private equity and was the ranked as number 20 in the world based on the amount of private equity entering the nation. Pakistan has been able to attract a portion of the global private equity investments because of economic reforms initiated in 2003 that have provided foreign investors with greater assurances for the stability of the nation and their ability to repatriate invested funds in the future.^[151]

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).^[152]

Foreign acquisitions and mergers[edit]

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.^[153]
• In 2016, FrieslandCampina acquired 51% stake in Engro Foods for $446.81 million.^[154]
• In 2016, The Abraaj Group sold its 66.4% stake in K-Electric to Shanghai Electric for $1.77 billion.^[155]

The foreign exchange receipts from these sales are also helping cover the current account deficit.^[156]

Foreign trade[edit]

Pakistan’s external sector continued facing stress during 2016–17, the decline in export was curtailed but still Pakistan’s merchandise trade exports declined by 1.4 percent during the fiscal year 2016–17. The imports continued to grow at a much faster rate and grew by a large percentage of 17.7 during the FY 2017 as compared to the previous year.^[74] 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.^[157]

Pakistan’s imports are showing rising trend at a relatively faster rate (17.7 percent) 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.

The sharp increase in imports may not be a cause for major worry, the imports during the current fiscal year included around $12 billion of capital goods (machinery, metals etc.), which would eventually increase the country’s industrial capacity and help exports flourish. The increase in import of machinery will have multiplier effect on the economy as the manufacturing has the highest backward linkage among the major sectors, as the demand for manufacturing grows, it in turn will help in the creation of jobs, investments, and innovations.

External imbalances[edit]

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.^[157]

Current account – The Current account deficit increased to US$6.1 billion in July–March FY 2017, against US$2.4 billion in July–March FY 2016

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 May 4, 2017 sufficient to finance around four month of import payments.^[157]

Economic aid[edit]

Pakistan receives economic aid from several sources as loans and grants, the International Monetary Fund (IMF), World Bank (WB), Asian Development Bank (ADB), etc. provides long-term loans to Pakistan. Pakistan also receives bilateral aid from developed and oil-rich countries.

The Asian Development Bank will provide close to $6 billion development assistance to Pakistan during 2006–9,^[158] 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.^[159] Japan will provide $500 million annual economic aid to Pakistan;^[160] 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.

More recently the government of Pakistan received an economic aid of US $5bn dollars out of which the US pledge of $1bn was described as a down-payment on the previously announced $1.5bn already promised to Pakistan for each of the next five years. The European Union promised $640m over four years, while reports said Saudi Arabia had pledged $700m over two years.^[161] Overall Friends of Pakistan had pledged $1.6 billion in aid, which would help Pakistan move forward on its way to self-reliance.

The China–Pakistan Economic Corridor is being developed with $46 billion of Chinese loans and grants.

Remittances[edit]

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 7 million-strong Pakistani diaspora, contributed US$19.3 billion to the economy in FY2017.^[162] The major source countries of remittances to Pakistan include UAE, US, Saudi Arabia, GCC countries (including Bahrain, Kuwait, Qatar and Oman), Australia, Canada, Japan, UK and EU countries like Norway and Switzerland.

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:^[74]

Country	[Million USD]
USA	2,443.54
UK	2,338.34
Saudi Arabia	5,469.77
UAE	4,309.88
Other GCC countries	2,324.06
EU countries	482.59
Norway	41.31
Switzerland	26.34
Australia	204.31
Canada	187.22
Japan	14.31
Other countries	1,461.91

Government finances[edit]

Fiscal budget summary (FY2017/18) ^[163]

• 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[edit]

Pakistan has a low tax/GDP ratio, which it is trying to improve, the current tax-to-GDP ratio is 12.6% (2016),^[7] which is a little less than its neighbour India 16.6% (2016) ^[164] while a slight more than Sri Lanka 12.3% (2015).^[165] 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[edit]

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.^[7]

Sovereign bonds[edit]

Pakistan is expected to sell a dual-tranche sovereign bond worth $750 million on 23 March 2006 that analysts said should ensure a favourable reception in the bond market, the 10-year tranche would be $500 million and the 30-year portion $250 million. Pricing is expected during New York trading hours on 23 March 2006, the sources said that the 10-year tranche was expected to be priced at around 100125%, while the longer-dated tranche was expected to be sold at around 70.875%, the top end of the indicative yield range of 3.75 to 10.875%.

The bonds, consisting of 10-year and 30-year tranches, had generated $1.5 billion in orders and a total size of as much as $1.25 billion had been anticipated for what is Pakistan's third foray into the international debt market since 2004.^[166]

The Government of Pakistan has been raising money from the international debt market from time to time.

The details of amount raised in various issues are as follows:

1999 – $6230 million

2004 – $5000 million @ 6.75%^[167]

2005 – $6000 million worth Islamic bonds^[166][168]

2007 – $7500 million @ 6.875% worth Euro Bonds which were highly over subscribed^[169]

Income distribution[edit]

• 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[edit]

By province and administrative unit:

• Economy of Azad Kashmir
• Economy of Balochistan, Pakistan
• Economy of the Federally Administered Tribal Areas
• Economy of Islamabad
• Economy of Khyber Pakhtunkhwa
• Economy of Punjab, Pakistan
• Economy of Sindh
• Economy of Karachi
• Economy of Lahore
• Economy of Faisalabad
• Economy of Rawalpindi

Other

• 2011 Pakistan federal budget
• Agriculture in Pakistan
• Economic effects of 2010 Pakistan floods
• Economic history of Pakistan
• Economy of the OIC
• 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)
• Ministry of Finance (Pakistan)
• Pakistan Board of Investment
• Prize Bonds
• Science and technology in Pakistan
• Trade Development Authority of Pakistan
• Trading Corporation of Pakistan

References[edit]

Bibliography[edit]

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

Further reading[edit]

• Gabol, Nasir (1990). Privatisation in Pakistan,. Paris, France: Organisation for Economic Cooperation and Development. ISBN 92-64-15310-1. 
• Ahmad, Viqar and Rashid Amjad. 1986. The Management of Pakistan's Economy, 1947–82. Karachi: Oxford University Press.
• Ali, Imran. 1997. ‘Telecommunications Development in Pakistan’, in E.M. Noam (ed.), Telecommunications in Western Asia and the Middle East. New York: Oxford University Press.
• Ali, Imran. 2001a. ‘The Historical Lineages of Poverty and Exclusion in Pakistan’. Paper presented at Conference on Realm, Society and Nation in South Asia. National University of Singapore.
• Ali, Imran. 2001b. ‘Business and Power in Pakistan’, in A.M. Weiss and S.Z. Gilani (eds), Power and Civil Society in Pakistan. Karachi: Oxford University Press.
• Ali, Imran. 2002. ‘Past and Present: The Making of the State in Pakistan’, in Imran Ali, S. Mumtaz and J.L. Racine (eds), Pakistan: The Contours of State and Society. Karachi: Oxford University Press.
• Ali, Imran, A. Hussain. 2002. Pakistan National Human Development Report. Islamabad: UNDP.
• Ali, Imran, S. Mumtaz and J.L. Racine (eds). 2002. Pakistan: The Contours of State and Society. Karachi: Oxford University Press.
• Amjad, Rashid. 1982. Private Industrial Investment in Pakistan, 1960–70. London: Cambridge University Press.
• Andrus, J.R. and A.F. Mohammed. 1958. The Economy of Pakistan. Stanford: Stanford University Press.
• Bahl, R., & Cyan, M. (2009). Local Government Taxation in Pakistan (No. paper0909). International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
• Barrier, N.G. 1966. The Punjab Alienation of Land Bill of 1900. Durham, NC: Duke University South Asia Series.
• Jahan, Rounaq. 1972. Pakistan: Failure in National Integration. New York: Columbia University Press.
• Kessinger, T.G. 1974. Vilyatpur, 1848–1968. Berkeley and Los Angeles: University of California Press.
• Kochanek, S.A. 1983. Interest Groups and Development: Business and Politics in Pakistan. New Delhi: Oxford University Press.
• LaPorte, Jr, Robert and M.B. Ahmad. 1989. Public Enterprises in Pakistan. Boulder, Colorado: Westview Press.
• Latif, S.M. 1892. Lahore. Lahore: New Imperial Press, reprinted 1981, Lahore: Sandhu Printers.
• Low, D.A. (ed.). 1991. The Political Inheritance of Pakistan. London: Macmillan.
• Noman, Omar. 1988. The Political Economy of Pakistan. London: KPI.
• Papanek, G.F. 1967. Pakistan's Development: Social Goals and Private Incentives. Cambridge, Massachusetts: Harvard University Press.
• Raychaudhuri, Tapan and Irfan Habib (eds). 1982. The Cambridge Economic History of India, 2 vols. Cambridge: Cambridge University Press
• White, L.J. 1974. Industrial Concentration and Economic Power. Princeton, N.J.: Princeton University Press.
• Ziring, Lawrence. 1980. Pakistan: The Enigma of Political Development. Boulder, Colorado: Folkestone.
• Ali, Imran. 1987. ‘Malign Growth? Agricultural Colonisation and the Roots of Backwardness in the Punjab’, Past and Present, 114
• Ali, Imran. August 2002. ‘The Historical Lineages of Poverty and Exclusion in Pakistan’, South Asia, XXV(2).
• Ali, Imran and S. Mumtaz. 2002. ‘Understanding Pakistan—The Impact of Global, Regional, National and Local Interactions’, in Imran Ali, S. Mumtaz and J.L. Racine (eds), Pakistan: the Contours of State and Society. Karachi: Oxford University Press.
• Hasan, Parvez. 1998. Pakistan's Economy at the Crossroads: Past Policies and Present Imperatives. Karachi: Oxford University Press.
• Hussain, Ishrat. 1999. Pakistan: The Economy of an Elitist State. Karachi: Oxford University Press.
• Khan, Shahrukh Rafi. 1999. Fifty Years of Pakistan's Economy: Traditional Topics and Contemporary Concerns. Karachi: Oxford University Press.
• Kibria, Ghulam. 1999. Shattered Dream: Understanding Pakistan's Development. Karachi: Oxford University Press.
• Kukreja, Veena. 2003. Contemporary Pakistan: Political Processes, Conflicts and Crises. New Delhi: Sage Publications.
• Zaidi, S. Akbar. 1999. Issues in Pakistan's Economy. Karachi: Oxford University Press
• Faheem, Khan. 2010. Issues in Pakistan's Economy. Peshawar:

External links[edit]

Wikimedia Commons has media related to Economy of Pakistan.

• 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. 
• Tariffs applied by Pakistan as provided by ITC's Market Access Map, an online database of customs tariffs and market requirements