The economy of Azad Kashmir, an administrative territory of Pakistan, is largely a developing one. The per capita income and provincial GDP estimates of Azad Kashmir are comparatively underrated when compared with development in other regions of the country although Azad Kashmir notably has a literacy rate that is substantially above the national average. Azad Kashmir's economy is heavily based on agriculture, but also relies on remittances sent each year by members of the large Kashmiri diaspora. The Kashmiris in the United Kingdom have contributed greatly to the development of Azad Kashmir through their in-flow of remmitances. In the southern districts, many men have been recruited into the Pakistani Armed Forces. Other locals travel to countries in Europe or the Middle East where they work in labour-oriented jobs. The local tourism industry has potential although is underdeveloped.
Challenges faced by Azad Kashmir's economy include the devastating 2005 Kashmir earthquake, the effects of which the region is still recovering from, as well as the large number of Kashmiri refugees numbering in the thousands from the neighbouring Indian-administered Jammu and Kashmir region.