Home > Country profiles > Economic and Political Outline
Pakistan: Economic and Political Outline
Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline
The GDP's growth rate remained positive despite the international economic crisis, thanks to the positive results of the agricultural sector. In recent years, the government made significant macro-economic reforms, which include the privatization of state-subsidized services, the institution of an anti-money laundering law, an increase in the harshness of punishment against the piracy of intellectual property and quick settlements for the disputes between investors. In the context of the fight against terrorism, the country has received substantial financial aid from the United States, an important factor for growth and economic stability. However, when this payments reached their end in October 2008, Pakistan asked aid from the IMF and adopted a stabilization plan which has obtained limited results. Despite a slight improvement, the country remains confronted with several difficulties: economic slowdown, budgetary deficit and insufficient growth of tax receipts. The major threats to Pakistan's economy are: international high prices in oil barrels, inflation, raw materials prices, a deficit on the balance of payments and political insecurity and uncertainty.
Since 2011, economic activity has not been sufficient to meet the challenges facing the Pakistani society. Growth has been declining (2.6% in 2011), the deficit reached 3.4% of the GDP and inflation reached 15%. The decrease in industrial production only testifies to the lack of investment and the chronic shortage of energy supply. The unemployment rate is estimated at about 7.5% and the level of underemployment is very high. Life expectancy is only 64 years and less than 55% of the population is literate. Moreover, the increasing poverty (22.3% of the population living below the poverty line) is the direct result of these economic difficulties and of problems of governance. Extreme poverty and underdevelopment are major problems, especially in rural areas. Lastly, the country's public debt stood at around 66.4% of GDP the end of 2011, up 17% compared to the previous year.
The perspectives of growth for 2012 are expected to be low due to the strong floods that again devastated the country in 2011. Thousands of agricultural workers lost their jobs and the cost of reconstruction is estimated at billions of US dollars. The country's economic situation therefore remains fragile and uncertian.
| Main Indicators | 2009 | 2010 | 2011 | 2012 (e) | 2013 (e) |
| GDP (billions USD) | 161.82 | 176.87 | 204.08 | 233.76 | 248.02 |
| GDP (Constant Prices, Annual % Change) | 1.7 | 3.8e | 2.6 | 3.8 | 4.5 |
| GDP per Capita (USD) | 962 | 1,030e | 1,164 | 1,307 | 1,359 |
| General Government Gross Debt (in % of GDP) | 57.4 | 56.8 | 57.6e | 57.3 | 56.5 |
| Inflation Rate (%) | 20.8 | 11.7e | 13.9e | 14.0 | 12.0 |
| Unemployment Rate (% of the Labor Force) | 6.2 | 6.2 | 6.2 | 6.2 | 6.2 |
| Current Account (billions USD) | -9.26 | -3.95e | 0.44 | -3.88 | -5.18 |
| Current Account (in % of GDP) | -5.7 | -2.2 | 0.2 | -2.1 | - |
Source: IMF - World Economic Outlook Database ; World Bank , Last Available Data
Note: (e) Estimated Data
The agricultural sector is the main pillar of the Pakistani economy. It contributes around 21.8% to the GDP and employs approximately 42% of the active population. Wheat, rice, cotton, sugarcane, fruits, vegetables and tobacco are the chief crops. Cattle livestock farming is also very important. Pakistan is the 4th largest cotton producer in the world and has abundant natural resources, mainly copper, oil and gas.
The industrial sector contributes up to 23.6% to the GDP. The major industries are textile production (the largest source of foreign exchange revenue), oil refining, metal processing, and the production of cement and fertilizers. Maritime transport is also a significant activity.
The tertiary sector contributes to around half of the GDP. Money transfers from Pakistanis working abroad create a considerable godsend financial income for the country.
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
| Employment By Sector (in % of Total Employment) | 44.7 | 20.1 | 35.2 |
| Value Added (in % of GDP) | 21.8 | 23.6 | 54.6 |
| Value Added (Annual % Change) | 2.0 | 4.9 | 4.6 |
Source: World Bank - Last Available Data.
Find more information about your business sector on our service Market reports.
| Monetary Indicators | 2006 | 2007 | 2008 | 2009 | 2010 |
| Pakistani Rupee (PKR) - Average Annual Exchange Rate For 1 USD | 60.27 | 60.74 | 70.41 | 81.71 | 85.19 |
Source: World Bank - Last Available Data.
Find out all the exchange rates daily on our service Currency converter.
Distribution of Economic freedom in the world
Source: 2011 Index of Economic freedom, Heritage Foundation
Note: The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labor freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.
See the Country Risk Analysis Provided By Ducroire.
Despite its economic and political difficulties, Pakistan has taken steps to liberalize its trade and investments in the context of commitments made with the WTO, IMF, and the World Bank. The share of foreign trade in the country’s GDP is around 35%. The drop in global demand during 2008-9 resulted in a high trade deficit.
Pakistan's three main customers are the United States (more than 27%), the United Arab Emirates (7%) and Afghanistan (6.5%). The main export commodities are cotton, textiles, clothing and cereals.
Its three main import partners are Saudi Arabia (more than 11% of imports), the United Arab Emirates (11%) and China (11%). Pakistan mainly imports fuels, oil, vehicles, iron and steel.
60 years after the establishment of diplomatic relations between the two countries, Pakistan and China continue to share the same strategic issue: how to counterbalance the Indian hegemony in Southern Asia. In addition to military cooperation, trade and investment also play a role and China's place as Pakistan's trading partner is becoming gradually more important.
Turkey, Saudi Arabia, Iran and the Golf countries are also among the country's largest trading partners.
| Foreign Trade Indicators | 2007 | 2008 | 2009 | 2010 | 2011 |
| Imports of Goods (million USD) | 32,590 | 42,329 | 31,668 | 37,810 | 44,040 |
| Exports of Goods (million USD) | 17,838 | 20,323 | 17,523 | 21,515 | 25,790 |
| Imports of Services (million USD) | 8,426 | 9,286 | 5,902 | 6,481 | 7,231 |
| Exports of Services (million USD) | 2,224 | 2,531 | 2,548 | 2,949 | 3,394 |
| Imports of Goods and Services (Annual % Change) | -3.5 | 3.5 | -15.2 | 11.2 | - |
| Exports of Goods and Services (Annual % Change) | 2.3 | -5.3 | -3.3 | 14.1 | - |
| Imports of Goods and Services (in % of GDP) | 21.3 | 23.9 | 20.4 | 19.0 | - |
| Exports of Goods and Services (in % of GDP) | 14.2 | 12.9 | 12.8 | 12.9 | - |
| Trade Balance (million USD) | 10,587 | -17,003 | 10,270 | 11,416 | - |
| Trade Balance (Including Service) (million USD) | 15,631 | -22,132 | - | - | - |
| Foreign Trade (in % of GDP) | 35.5 | 36.7 | 33.2 | 31.9 | - |
Source: WTO - World Trade Organization ; World Bank , Last Available Data
| Main Customers (% of Exports) |
2010 |
| United States | 17.2% |
| United Arab Emirates | 8.6% |
| Afghanistan | 7.9% |
| China | 6.7% |
| United Kingdom | 5.2% |
| See More Countries | 54.5% |
| Main Suppliers (% of Imports) |
2010 |
| United Arab Emirates | 14.0% |
| China | 14.0% |
| Saudi Arabia | 10.2% |
| Kuwait | 6.9% |
| Malaysia | 5.5% |
| See More Countries | 49.4% |
Source: Comtrade, Last Available Data
Source: Comtrade, Last Available Data
To go further, check out our service Import export flows.
Note: Name and alliances of political parties in Pakistan keep on changing frequently.
Source: Worldwide Press Freedom Index 2011, Reporters Without Borders
Note: The world rankings, published annually, measures the violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position is assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire sent to partner organizations,150 RWB correspondents, journalists, researchers, jurists and activists of human rights, including the main criteria - 44 in total - to assess the situation of press freedom in a given country. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).
Map of freedom 2010
Source: Freedom House
Note: The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.
Any Comments About This Content? Report It to Us.
© Export Entreprises SA, All Rights Reserved.
Last Updates: May 2012