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Economy of Pakistan

The economy of Pakistan is the third fastest growing economy after the People's Republic of China and India. It is the 70th biggest economy in the world. With the world's sixth-largest population, Pakistan is developing a highly-skilled labor force with business friendly policies. Economic growth (6-7%) and foreign investment is strong. At purchasing power parity, Pakistan's GDP is $475.5 billion. The World Bank classifies Pakistan as a low-income economy.

Economic & Social Indicators of Pakistan Economy

Pakistan Economy registers a six to seven percent economic growth with its foreign direct investment escalating day by day. Pakistan, from the time of its independence started with a purely agricultural economy. But soon its industrial wing gathered momentum and soon Pakistan became the role model world over.

It is one among the growing economies of the World. The economic potentiality of the country is better judged only when we mark the positive growth rate of the economy since 1951.

The country has a total surface area of 796.1 thousand sq mi.

Demography and Social Indicators of Pakistan Economy

In mid Year 2005, the population of the country was 155.8 millions in comparison to the 152.1 millions in the previous year. The average annual growth rate of the population (%) in the country (1999-05) was 2.4.

The following table represents the annual growth rate of population in the country.
  • The life Expectancy rate of the country in the year 2003 was 64.1 Years.
  • The Infant Mortality rate (per 1,000 life births) in the country was 74.3 in the year 2003.
  • Under 5 mortality rate (per 1,000 children) was 98 in the year 2003.
  • The adult male literacy rate (% of males ages 15 and above) was 61.7 in the year 2004.
  • The adult female literacy rate (% of females ages 15 and above) was 35.2 in the year 2004.

Pakistan Economy and Key Economic Indicators

The Gross National Income, Atlas method of the country (Current US $) has reached 90.7 billions in the year 2004. The GNI percapita Atlas method (Current US $) in the country was 600.0 in 2004.

The Gross Domestic Product (Current $) in the country was 96.1 billions in the year 2004 with an annual growth rate of 6.4 percent in the same year.

The average annual growth rate of GDP for the country is estimated at 6.5 percent for the period of 2005-09.

Structure of the Pakistan Economy

Among the various sectors of the economy the manufacturing sector has grown very fast and has reached a double-digit number i.e. 18% in the year 2003.

The major agricultural products of the country are cotton, wheat, rice, sugarcane, fruits, vegetables, milk, beef, mutton, eggs, poultry and tea.

The main industries of the country are textiles, chemicals, food processing, steel, transport equipment, machinery, beverages, constructions, materials, clothing and paper products.

Exports & Imports of Pakistan

Major Exports of Pakistan

The main export items of Pakistan are rice, furniture, cotton fiber, textiles, leather etc.

Major Imports of Pakistan

The main import items of Pakistan are petroleum, industrial machinery, automobiles, computer, computer parts etc.

BOP Situation of the Pakistan Economy

The BOP of Pakistan registered a trade deficit worth $5.405 billion. This was due to the high import bill and the rise in the prices of imports. This rise in the trade deficit is the main reason, according to many economists, behind the depreciation in the Pakistani rupee against dollar and other currencies.

International Relations of the Pakistan Economy

The relations of Pakistan with some countries like India is very bitter. Otherwise it has good trade relations with US, UK Japan, China etc.

According to the 2005 estimated data, the exports earnings of the state are $ 17 billion.

International Views on Pakistan Economy

Views on Pakistan's economy from some of the reputable international institutions:


  • Pakistan 's economic performance in the past five years has been commendable. GDP growth is higher, poverty rates are down, inflation is lower, FDI is up, and fiscal deficits are down. Driving all of these improvements has been an environment of relative political stability under the pro-reform administration of President Musharraf and Prime Minister Shaukat Aziz. Its run of success brought Pakistan 's stock onto the radar screen of foreign fund managers. Added to this, investibility improved due to the increase in market capitalization, aided by higher free float through new stock market offerings. These favorable dynamics in the size and efficiency of both the physical and human capital stock make a 6-7% target range for medium-term growth seem very reasonable, in our view. The IMF, in its recently completed Article IV consultation, uses a baseline assumption for real GDP growth of 7%.


  • Pakistan 's GDP growth in 2007 will range between 7-7.5%, based on recovery in agriculture sector and capacity expansions in the manufacturing sector. Merrill Lynch expects Pakistan to issue a Eurobond this year which it expects to be over-subscribed. Market capitalization surged 5.5 times from US$7 billion to US$46 billion over a period of four years, taking stock market capitalization to GDP from 9% at end-FY02 to around 36% at end-FY06.


  • The economy has grown strongly over the past years, at an average pace of 7.5%. In recent years, the Government's strong macroeconomic policies, high growth rates, increases in pro-poor spending, and burgeoning workers' remittances have all contributed to a steep decline in the incidence of poverty and the unemployment rate.


  • Pakistan 's GDP is expected to pick up to 7 percent in 2007 bolstered by an expansion in agriculture production and increased capacity following government infrastructure investments and private sector investments in the textile sector.


  • The 2007 Index of Economic Freedom jointly conducted by the Heritage Foundation and the Wall Street Journal, has put Pakistan at the 89 th place, ahead of India (104) and China (119) out of 161 countries.

S&P ratings:

Standard and Poor's in December 2006 announced upgrades for credit ratings to:
  • B+ for foreign currency,
            -> BB for local currency long-term ratings, and
            -> B for short-term sovereign ratings.


  • The country's rating for foreign currency bonds and the government's rupee dominated debt reflect the significant improvement in Pakistan 's external liquidity and the government's more efficient macro-economic management in the recent years. As a result of privatization, consolidation and restructuring. Moody's investor service upgraded Pakistan 's foreign and local currency government ratings from B-1 to B-2.


  • Pakistan was top reformer in 2006 and the runner up reformer in 2007. Recent reforms have resulted in a drop in the number of days required to import in Pakistan : from 39 to 19 days. Pakistan also reformed positively in the area of taxation by steadily reducing its corporate tax rate, from 39% in 2004 to 35% in 2006. Pakistan scores well on the indicators related to starting a business (54th out of 175) and protecting investors (19th out of 175).


  • Pakistan had a relatively good showing on the BCI, developed by Harvard Business School competitiveness expert, In the new BCI, Pakistan ranks 67th among 121 countries. On the GCI, Pakistan improved from last year's 94th place to 91st place out of 125 countries that participated in this year's survey. Pakistan 's gains take on added significance when compared to the drop in rankings experienced by many noteworthy emerging markets.


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