Economy of Pakistan

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Economy of Pakistan
Karachi, the financial hub of Pakistan
CurrencyPakistani rupee (₨) (PKR)
1 July – 30 June
Trade organisations
ECO, SAFTA, WTO, AIIB, ADB, and others
Country group
Statistics
PopulationIncrease 241,499,431 (5th, 2023 Census)[3]
GDP
GDP rank
GDP growth
  • Increase 6.1% (FY 2022)[4]
  • Decrease -0.5% (FY 2023)[4]
  • Increase 2.1% (FY 2024)[5][a]
GDP per capita
  • Decrease $1,471 (nominal; 2023)[4]
  • Increase $6,773 (PPP; 2023 est.)[4]
GDP per capita rank
GDP by sector
GDP by component
  • Positive decrease 28.3% (January 2024 YoY)[8]
Negative increase 22.00% (January 2024)[9]
Population below poverty line
31.6 medium (2018, World Bank)[14]
Labour force
  • Increase Total 71.76 million
  • Increase Employed 67.25 million (2021)[17]
Labour force by occupation
Unemployment
  • Negative increase 7% (2023)[18]
  • Negative increase 17.4 million unemployed (2023)[18]
Main industries
External
ExportsDecrease $35.210 billion (FY 2023)[19]
Export goods
Main export partners
ImportsDecrease $60.013 billion (FY 2023)[19]
Import goods
Main import partners
FDI stock
  • Decrease $31.540 billion
  • Decrease Abroad: $1.870 billion (31 Dec 2021)[23]
Increase -2.557 billion US$ (FY 2023)[24]
Positive decrease $125.7 billion (Mar 2023)[25]
Public finances
Negative increase 74.8% of GDP (Jun 2023)[26]
Negative increase −7.7% of GDP (FY 2023)[27]
RevenuesDecrease 11.4% of GDP; 9,634 billion PKR or $39 billion (FY 2023)[27]
ExpensesPositive decrease 19.1% of GDP; 16,155 billion PKR $65 billion (FY 2023)[27]
Economic aidIncrease $2.6983 billion (2021)[28]

[33]

  • Outlook: Negative
Increase $8.27bn (January 2024)[34] (115th)
Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars.

The economy of Pakistan is categorized as a developing economy. It ranks as the 24th-largest based on GDP using purchasing power parity (PPP) and the 46th largest in terms of nominal GDP. With a population of 241.5 million people as of 2023, Pakistan’s position at per capita income ranks 161st by GDP (nominal) and 138th by GDP (PPP) according to the International Monetary Fund (IMF).[4]

In its early years, Pakistan's economy relied heavily on private industries. The nationalization of a significant portion of the sector, including financial services, manufacturing, and transportation, began in the early 1970s under Zulfikar Ali Bhutto. During Zia-ul Haq's regime in the 1980s, an "Islamic" economy was adopted, outlawing economic practices forbidden in Sharīʿah and mandating traditional religious practices. The economy started privatizing again in the 1990s.

The economic growth centers in Pakistan are located along the Indus River;[35][36] these include the diversified economies of Karachi and major urban centers in Punjab (such as Faisalabad, Lahore, Sialkot, Rawalpindi, and Gujranwala), alongside less developed areas in other parts of the country.[35] Pakistan was classified as a semi-industrial economy for the first time in the late 1990s, albeit an underdeveloped country[37] with a heavy dependence on agriculture, particularly the textile industry relying on cotton production.[38][35][39] Primary export commodities include textiles, leather goods, sports equipment, chemicals, and carpets/rugs.[40][41]

Pakistan is presently undergoing economic liberalization, including the privatization of all government corporations, aimed at attracting foreign investment and reducing budget deficits.[42] However, the country continues to grapple with challenges such as a rapidly growing population, high illiteracy, political instability, a hostile neighborhood, and heavy foreign debt.

Economic history

Inception

In the late 1940s, upon its establishment, Pakistan had an agrarian-based economy. Agriculture constituted 53% of the country's GDP in 1947 and slightly increased to 53.2% in 1949-50. With a population of approximately 30 million, including around 6 million residing in urban areas, about 65% of the labor force was engaged in agriculture. The agricultural sector played a crucial role, contributing to 99.2% of exports and making up nearly 90% of foreign exchange earnings.

Despite possessing significant land and mineral resources in both East and West Pakistan, including natural gas, crude oil, coal, limestone, and marble, Pakistan faced numerous challenges. In 1950, its per capita income was around $360 (in 1985 international dollars), and the literacy rate was only 10%. The nation encountered a lack of economic infrastructure, financial resources, and an industrial foundation, particularly with poverty rates ranging from 55% to 60% in the West Pakistan region.

Due to limited capital in the small private sector, the government opted to focus on the public sector to foster economic and industrial development. In the fiscal year 1949-50, Pakistan recorded a national savings rate of 2%, a foreign savings rate of 2%, and an investment rate of 4%. Manufacturing contributed 7.8% to the GDP, while services, trade, and other sectors accounted for a significant 39%, reflecting a policy centered around import-substituting industrialization. The trade balance of payments indicated a deficit of 66 million Rupees (Rs) during the period spanning 1949/50 to 1950/51.[43]

1950s

The 1950s marked the initiation of planned development in Pakistan, with the introduction of the Colombo Plan in 1951 leading to a series of Five-Year Plans from 1955 to 1998. Concurrently, a Ten-Year Perspective Plan was implemented, complemented by a rolling Three-Year Development Plan.

During the 1950s, Pakistan pursued a policy of import-substituting industrialization. Notably, the Korean War (1950-1953) brought substantial merchant profits to Pakistan's public and emerging private sectors, fueling industrialization.

In 1952, Pakistan imposed bans on the imports of cotton textiles and luxury goods, followed by comprehensive import regulations in 1953, propelling the country into the ranks of the fastest-growing nations. However, biased policies against agriculture and unfavorable trade terms between agriculture and industry led to a decline in the annual growth rate of agriculture.

By the late 1950s, Pakistan achieved self-sufficiency in cotton textiles, emphasizing export development. The influx of US military and economic aid amounting to US$500 million during 1955-58 contributed to Pakistan's growth reliant on foreign aid.

In 1959, after a military coup d'état in 1958, the martial law regime introduced export bonus vouchers as import licenses and exempted certain goods from licensing. During this period, Pakistan faced a worsening trade balance, with deficits increasing from -831 million Rupees in 1950/51 to -1043 million Rupees in 1959/60.

Economically, agriculture grew at an annual rate of 1.6%, while manufacturing expanded impressively at 7.7% per annum during the 1950s. In the fiscal year 1959-60, the Per Capita Gross National Product (GNP) stood at Rs. 355 in West Pakistan and Rs. 269 in East Pakistan, indicating a growing economic disparity between the two regions.[43]

1960s

In the 1960s, amid a substantial influx of American aid, Pakistan enjoyed political stability, fostering robust economic growth. Poverty, measured by the poverty headcount ratio, fluctuated from nearly 50% in the early 1960s to 54% in 1963-64.

During the 1960s, Pakistan achieved an impressive annual agricultural growth rate of 5%, driven by substantial investments in water resources, increased farmer incentives, mechanization, greater use of fertilizers and pesticides, and expanded cultivation of high-yielding rice and wheat varieties in the Green Revolution.

Large-scale manufacturing experienced significant growth, expanding at a remarkable rate of 16% per annum from 1960/61 to 1964/65, fueled by protective measures for domestic industries, including export subsidies.

However, the Pakistan-India War of 1965 led to reduced foreign economic assistance, impacting the growth rate of large-scale manufacturing. From 1965-70, this sector grew at a comparatively lower rate of 10% per annum.

Despite challenges, Pakistan achieved an impressive average annual GDP growth rate of 6.7% throughout the 1960s. In the fiscal year 1969-70, the poverty incidence rate decreased to 46%. Per Capita GNP was Rs. 504 in West Pakistan and Rs. 314 in East Pakistan, indicating a widening regional economic disparity.[43]

1970s

The economic landscape in the early 1970s witnessed growing disparities between East and West Pakistan, leading to East Pakistan's declaration of independence and the emergence of Bangladesh in 1971. Subsequently, Pakistan underwent notable transformations in both its political and economic spheres.

Under martial law authorities, amidst challenging macroeconomic conditions, the socialist Pakistan People's Party gained empowerment. This period grappled with numerous economic challenges, including a surge in poverty incidence to 55% during 1971-72. Pakistan also confronted heightened import costs due to the global oil price shock in October 1973, a severe global recession from 1974 to 1977, cotton sector failures in 1974-75, pest infestations affecting crops, and massive floods in 1973, 1974, and 1976-77.

One significant economic issue during this time was high inflation, with prices increasing by an average of 15% per annum between 1972 and 1977. The fiscal deficit/GDP ratio averaged 8.1% during 1973-77, indicating substantial fiscal challenges. Trade imbalances were apparent, with trade deficits rising from US$337 million in 1970-71 to US$1,184 million in 1976-77.

The military coup d'état of 1977, leading to the establishment of a martial law regime that initiated denationalization, deregulation, and privatization policies. Agriculture experienced modest growth at a rate of 2.4% per annum, while large-scale manufacturing expanded at a rate of 5.5% per annum during the 1970s.

Large and medium-scale private manufacturing played a significant role, contributing 75% of the total value-added and investment in manufacturing during the 1970s. The remaining 25% of value-added came from small-scale manufacturing.

Overall, this period was marked by significant political and economic changes, driven by challenges posed by economic disparities, political shifts, and efforts to address issues such as inflation, fiscal deficits, and trade imbalances.[43]

1980s

The 1980s brought substantial changes to Pakistan's economic landscape, moving away from the nationalization policies of the 1970s and fostering private sector industrial investment, which greatly contributed to robust economic growth. Notable developments in this era included a drop in the poverty headcount ratio to 29.1% in 1986-87, showcasing a decline in poverty incidence. The unemployment rate exhibited a positive trend, decreasing from 3.7% in 1980 to 2.6% in 1990.

Between 1985 and 1988, the government endeavored to implement an Islamic interest-free banking system, introducing business partnerships based on profit and loss sharing. The national savings/GDP ratio reached a notable 16% in 1986-87, largely due to significant worker remittances from the Middle East. Despite this growth, challenges emerged, including negative public savings and a declining public investment/GDP ratio throughout the 1980s.

To address increasing budget deficits in the early 1980s, the government heavily relied on non-bank domestic borrowing, resulting in substantial domestic debt growth. Consequently, the public debt/GDP ratio surged to 77.1% in 1988, 81.9% in 1989, and 82.6% in 1990, leading to significant interest payments and persistent fiscal deficits.

In 1985, democracy was restored in Pakistan, marking a pivotal political development. The country experienced a commendable average annual GDP growth rate of 6.3% between 1980 and 1990. The 1980s saw a surge in manufacturing exports, with an annual large-scale manufacturing growth rate of 8.8%, and solid growth in agriculture, with an annual agricultural growth rate of 5.4%.

These highlights underscore a transformative and recovering economic period in the 1980s, characterized by a shift in economic policies, improved fiscal performance, and substantial progress in poverty reduction and employment. The era also witnessed efforts to align financial practices with Islamic principles and significant economic growth in the manufacturing and agricultural sectors.[43]

1990s

The 1990s posed a formidable economic landscape for Pakistan, marked by a series of challenges and developments. Declining worker remittances and escalating external deficits set the tone for economic strains. Simultaneously, the decade witnessed the second-worst inflation in Pakistan's history, driven by diminishing GDP growth rates. Unemployment surged, reaching 5.9% in 1991 and escalating further to 7.2% in 2000.

Pakistan's external debt tripled, soaring to US$30 billion by 1995. The external debt/GDP ratio rose from 42% to 50%, accompanied by increases in the external debt/exports ratio (from 209% to 258%) and the debt service ratio (from 18% to 27%). A deteriorating external debt profile led to a rise in domestic debt, reaching Rs. 909 billion, and a domestic debt/GDP ratio of 42%.

The late 1990s witnessed a severe debt crisis, with the public debt/GDP ratio skyrocketing from 57.5% in 1975-77 to 102% in 1998-99. The public debt/revenues ratio surged to 624%, and the interest payments/revenues ratio reached 42.6%, rendering Pakistan's public debt unsustainable. Concerns over external debt default emerged in 1996 and 1998, triggered by Western economic sanctions in response to Pakistan's nuclear tests in May 1998, causing massive capital flight.

Despite these challenges, Pakistan managed to sustain an agricultural growth rate of 4.4% per annum and a large-scale manufacturing growth rate of 4.8% per annum throughout the 1990s. However, the era witnessed a significant increase in poverty incidence, reaching 30.6% in 1998-99. The decade encapsulated a complex economic narrative, as Pakistan navigated external debt burdens, fiscal imbalances, inflation, and rising unemployment. Amid these difficulties, there were positive aspects, including growth in key sectors like agriculture and manufacturing. Nonetheless, the 1990s also brought forth a looming threat of debt default, magnified by economic sanctions in response to nuclear tests.[43]

2000s

The 2000s witnessed a period of substantial economic challenges and transformations for Pakistan. The impact of high public debt gained prominence, identified by the official Debt Reduction and Management Committee in 2001, contributing to a decline in the growth rate to less than 4% per annum. Despite an initial upturn in the growth rate, the decade unfolded with persistent macroeconomic crises. Although achieving a noteworthy growth rate of 8.6% in 2004-05, subsequent years were marred by a series of setbacks, including a growth slowdown, low growth, high inflation, an energy crisis, and worsening fiscal and balance of payments positions.

The economic landscape reflected the complexities faced by the population, illustrated by a rise in poverty incidence to 34.5% in 2000-01. However, a subsequent decrease to 22.3% in 2005-06 offered a nuanced perspective on the decade's economic trajectory. The unemployment rate saw fluctuations, rising to 7.8% in 2002 but later declining to 5% by 2008.

Efforts to enhance education and literacy rates were evident as adult literacy stood at 55% in 2007-08. Nevertheless, challenges persisted, and economic crises hit Pakistan in 2008, primarily influenced by the global financial crisis. Despite these adversities, economic growth in 2009-2010 reached a respectable 4.1%, with positive contributions from various sectors, including a 2% growth in agriculture, 4.9% growth in industrial output, 4.4% growth in large-scale manufacturing, and a 4.6% expansion in the services sector.

By March 2010, public debt had accumulated to Rs. 8,160 billion, with a total public debt/GDP ratio of 56% and a foreign-currency denominated debt/GDP ratio of 25%. Amid these economic dynamics, Pakistan underwent a structural transition. The GDP share of agriculture declined from 53% in 1947 to 21.2% in 2010, while the GDP share of industry rose from 9.6% in 1949-50 to 25.4% in 2010. Additionally, the GDP share of the services sector increased from 37.2% in 1950 to 53.4% in 2010. The 2000s encapsulated a multifaceted economic narrative for Pakistan, marked by challenges, crises, and significant structural shifts, reflecting the nation's resilience and adaptability.[43]

Data

Gross domestic product (GDP)

The table below displays key economic indicators from 1980 to 2022. Inflation rates below 5% are highlighted in green.[4]

Year GDP

(Billion US$ PPP)

GDP per capita

(US$ PPP)

GDP

(Billion US$ nominal)

GDP per capita

(US$ nominal)

GDP growth

(Real)

Inflation rate

(Percent)

Unemployment

(Percent)

Government debt

(% of GDP)

1980 79.0 950.0 34.8 418.9 Increase7.3% Negative increase11.9% n/a n/a
1981 Increase91.8 Increase1,072.8 Increase41.2 Increase481.3 Increase6.4% Negative increase11.9% n/a n/a
1982 Increase104.9 Increase1,190.0 Increase45.0 Increase511.0 Increase7.6% Negative increase5.9% n/a n/a
1983 Increase116.4 Increase1,283.6 Decrease42.0 Decrease463.7 Increase6.8% Negative increase6.4% 3.9% n/a
1984 Increase125.4 Increase1,345.3 Increase45.6 Increase489.8 Increase4.0% Negative increase6.1% Positive decrease3.8% n/a
1985 Increase140.6 Increase1,468.4 Steady45.6 Decrease476.7 Increase8.7% Negative increase5.6% Positive decrease3.7% n/a
1986 Increase152.5 Increase1,551.3 Increase46.7 Decrease475.3 Increase6.4% Increase3.5% Positive decrease3.3% n/a
1987 Increase165.4 Increase1,638.5 Increase48.8 Increase483.9 Increase5.8% Increase4.7% Positive decrease3.1% n/a
1988 Increase182.2 Increase1,759.4 Increase56.3 Increase543.1 Increase6.4% Negative increase8.8% Steady3.1% n/a
1989 Increase198.5 Increase1,868.3 Increase58.7 Increase552.0 Increase4.8% Negative increase7.9% Steady3.1% n/a
1990 Increase215.4 Increase1,970.1 Increase58.9 Decrease538.4 Increase4.6% Negative increase9.1% Steady3.1% n/a
1991 Increase234.1 Increase2,094.8 Increase66.9 Increase598.4 Increase5.4% Negative increase12.6% Negative increase5.9% n/a
1992 Increase257.5 Increase2,211.1 Increase71.5 Increase614.2 Increase7.6% Increase4.8% Steady5.9% n/a
1993 Increase269.2 Increase2,252.4 Increase75.7 Increase633.6 Increase2.1% Negative increase9.8% Positive decrease4.7% n/a
1994 Increase286.9 Increase2,341.1 Increase76.3 Decrease622.8 Increase4.4% Negative increase11.3% Negative increase4.8% 64.8%
1995 Increase307.8 Increase2,449.6 Increase89.2 Increase709.9 Increase5.1% Negative increase13.0% Negative increase5.4% Positive decrease58.0%
1996 Increase334.1 Increase2,594.8 Increase93.1 Increase723.5 Increase6.6% Negative increase10.8% Steady5.4% Negative increase58.2%
1997 Increase345.6 Increase2,620.8 Decrease91.8 Decrease696.4 Increase1.7% Negative increase12.8% Negative increase6.1% Negative increase58.5%
1998 Increase361.7 Increase2,678.9 Decrease91.4 Decrease677.0 Increase3.5% Negative increase6.8% Positive decrease5.9% Negative increase59.5%
1999 Increase382.2 Increase2,765.6 Decrease86.6 Decrease626.5 Increase4.2% Negative increase5.7% Steady5.9% Negative increase67.2%
2000 Increase406.1 Increase2,855.1 Increase89.7 Increase630.3 Increase3.9% Increase3.6% Negative increase7.8% Negative increase68.4%
2001 Increase423.4 Increase2,916.7 Decrease87.4 Decrease602.0 Increase3.7% Increase4.4% Steady7.8% Negative increase72.2%
2002 Increase443.4 Increase2,995.0 Increase87.9 Decrease593.9 Increase2.4% Increase3.5% Negative increase8.3% Positive decrease67.6%
2003 Increase473.5 Increase3,119.8 Increase101.1 Increase666.1 Increase5.6% Increase3.1% Steady8.3% Positive decrease62.7%
2004 Increase522.6 Increase3,376.5 Increase118.8 Increase767.8 Increase7.7% Increase4.6% Positive decrease7.7% Positive decrease56.3%
2005 Increase587.3 Increase3,722.9 Increase132.8 Increase842.0 Increase7.5% Negative increase9.3% Steady7.7% Positive decrease52.3%
2006 Increase640.6 Increase3,986.8 Increase154.5 Increase961.4 Increase5.6% Negative increase7.9% Positive decrease6.2% Positive decrease48.4%
2007 Increase694.4 Increase4,244.6 Increase171.5 Increase1,048.4 Increase5.5% Negative increase7.8% Positive decrease5.2% Positive decrease47.1%
2008 Increase743.0 Increase4,362.9 Increase191.4 Increase1,124.0 Increase5.0% Negative increase12.0% Steady5.2% Negative increase51.9%
2009 Increase750.5 Decrease4,314.4 Decrease189.0 Decrease1,186.5 Increase0.4% Negative increase19.6% Negative increase5.5% Negative increase52.8%
2010 Increase779.1 Increase4,386.4 Increase199.4 Decrease1,122.7 Increase2.6% Negative increase10.1% Negative increase6.0% Negative increase54.5%
2011 Increase824.1 Increase4,545.1 Increase240.4 Increase1,325.8 Increase3.6% Negative increase13.7% Steady6.0% Positive decrease52.8%
2012 Increase847.1 Increase4,577.9 Increase252.5 Increase1,364.8 Increase3.8% Negative increase11.0% Steady6.0% Negative increase56.7%
2013 Increase883.4 Increase4,679.4 Increase260.3 Increase1,378.6 Increase3.7% Negative increase7.4% Steady6.0% Negative increase57.9%
2014 Increase931.7 Increase4,838.4 Increase275.1 Increase1,428.4 Increase4.1% Negative increase 8.6% Steady6.0% Positive decrease57.1%
2015 Increase981.6 Increase4,998.5 Increase304.5 Increase1,550.5 Increase4.1% Increase4.5% Positive decrease5.9% Positive decrease57.0%
2016 Increase1,010.7 Increase5,048.9 Increase313.6 Increase1,566.6 Increase4.6% Increase2.9% Steady5.9% Negative increase60.8%
2017 Increase1,058.5 Increase5,159.0 Increase339.2 Increase1,653.4 Increase4.6% Increase4.1% Positive decrease5.8% Negative increase60.9%
2018 Increase1,150.0 Increase5,482.7 Increase356.2 Increase1,698.0 Increase6.1% Increase3.9% Steady5.8% Negative increase64.8%
2019 Increase1,207.1 Increase5,642.1 Decrease321.1 Decrease1,500.7 Increase3.1% Negative increase6.7% Negative increase6.9% Negative increase77.5%
2020 Increase1,211.4 Decrease5,550.6 Decrease300.4 Decrease1,376.5 Decrease-0.9% Negative increase10.7% Positive decrease6.6% Negative increase79.6%
2021 Increase1,338.8 Increase6,014.7 Increase348.5 Increase1,565.6 Increase5.8% Negative increase8.9% Positive decrease6.3% Positive decrease73.5%
2022 Increase1,520.0 Increase6,695.3 Increase374.7 Increase1650.3 Increase6.1% Negative increase12.1% Positive decrease6.2% Negative increase76.2%
2023 Increase1,568.4 Increase6,773.5 Decrease340.6 Decrease1,471.1 Decrease-0.5 Negative increase29.2% Negative increase8.5% Negative increase76.6%

Stock market

Statue of a bull outside the Islamabad Stock Exchange.

In the first four years of the twenty-first century, Pakistan's KSE 100 Index was declared the best-performing stock market index in the world by the international magazine "Business Week".[44][citation needed] The stock market capitalization of listed companies in Pakistan was valued at $5,937 million in 2005 by the World Bank.[45] On 11 January 2016, with the aim of reducing market fragmentation and creating a strong case for attracting strategic partnerships necessary for providing technological expertise, all three stock exchanges, including Karachi Stock Exchange, Lahore Stock Exchange, and Islamabad Stock Exchange, were inducted into a unified Pakistan Stock Exchange.[46]

In May 2017, the American provider of stock market indexes and analysis tools, MSCI, confirmed that the Pakistan Stock Exchange (PSX) had been reclassified from Frontier Markets to Emerging Markets in its semi-annual index review.[47] The Pakistan Stock Exchange also successfully navigated through the initial COVID-19 induced economic downturn and earned the title of being the ‘best Asian stock market and fourth best-performing market across the world in 2020.’ The PSE-100 index continued to climb throughout the year. Nearly 40 percent growth in the PSE-100 Index in FY 2021 was driven by the government's large stimulus package, the central bank's stable policy rate, an uptick in large scale manufacturing, improvement in external accounts, and reforms introduced by the Security and Exchange Commission of Pakistan (SECP) and PSX in the wake of the COVID-19.[48]

PSX 100 index growth rate[49]

List 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 FY 2021 FY 2022
PSX 100 index growth % Increase 34.1 Increase 37.9 Decrease -10.8 Decrease -41.7 Increase 35.7 Increase 28.5 Increase 10.4 Increase 52.2 Increase 41.2 Increase 16.0 Increase 9.8 Increase 23.2 Decrease-10.0 Decrease-19.1 Increase 1.5 Increase 37.6 Decrease -12.3

The sales of all non-financial companies surged to Rs 9,521 billion in the fiscal year 2021, marking a substantial increase of Rs 1,465 billion compared to the preceding year's decline of Rs 807 billion. EBIT (earnings before interest and tax) recorded an increase of Rs 433 billion (53.21 percent YoY growth) during FY21, as general, administrative, and other expenses witnessed a relatively smaller rise in the same period. Interest expenses dropped to Rs 224 billion in FY21 from Rs 299 billion in FY20, resulting in a massive YoY increase of Rs 514 billion in profit before taxation. Additionally, profit after tax of all companies rose by Rs 404 billion, posting a YoY growth of 125.06 percent during FY21 over FY20. The net profit margin of all companies jumped to 7.64 in FY21 from 4.01 in FY20, primarily due to exceptional improvement in private sector companies' net profit margin. Return on assets (ROA) and return on equity (ROE) of all companies rose to 6.37 percent and 17.93 percent in FY21 compared to 3.10 percent and 8.91 percent in the preceding year. Private sector companies were the prime contributors to the improvement of ROA and ROE, with public sector companies contributing marginally. The key statistics of all public and private non-financial companies listed at the Pakistan Stock Exchange are provided in the following table:[50]

Financial Analysis of Companies (Non-Financial) (Billion Rupees)
List 2016 2017 2018 2019 2020 2021
Total Assets 6,781 Increase 7,672 Increase 8,845 Increase 10,131 Increase 10,712 Increase 12,143
Total Liabilities 4,024 Negative increase 4,646 Negative increase 5,598 Negative increase 6,628 Negative increase 6,955 Negative increase 7,780
Shareholders' Equity 2,757 Increase 3,025 Increase 3,247 Increase 3,503 Increase 3,756 Increase 4,363
Total Sales 5,504 Increase 6,405 Increase 7,702 Increase 8,863 Decrease 8,056 Increase 9,521
Profit Before Tax 498 Increase 606 Increase 613 Decrease 612 Decrease 482 Increase 996
Profit After Tax 361 Increase 435 Decrease 431 Decrease 412 Decrease 323 Increase 728
%
Net Profit Margin 6.55 Increase 6.79 Decrease 5.59 Decrease 4.65 Decrease 4.01 Increase 7.64
Return on Assets 0.84 Increase 0.89 Increase 0.93 Steady 0.93 Decrease 0.77 Increase 0.83
Return on Equity 13.77 Increase 15.03 Decrease 13.76 Decrease 12.20 Decrease 8.91 Increase 17.93
earnings per share 3.91 Increase 4.49 Decrease 4.47 Decrease 4.17 Decrease 3.18 Increase 6.87

Middle class

The Dawood Centre in Karachi, M.T. Khan Road

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.[51] Official figures also show that the proportion of households that own a motorcycle and washing machines has grown impressively over the past 15 years.[52] 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 recorded at Rs. 179 billion during FY 2022. Auto finance continued to be the dominant segment, followed by house building, which showed remarkable growth after the Mera Pakistan Mera Ghar scheme initiated by the State Bank of Pakistan in December 2020. Under the scheme, 100 billion rupees have been disbursed by the banks until June 30, 2022. The total amount approved by banks reached Rs. 236 billion, while the requested amount crossed half a trillion rupees.[51][53]

Poverty alleviation expenditures

The Pakistan government spent over 1 trillion rupees (about $16.7 billion) on poverty alleviation programs during the past four years, reducing poverty from 35% in 2000–01 to 29.3% in 2013 and further to 17% in 2015.[54] Rural poverty remains a pressing issue, as development in those areas has been significantly slower than in major urban areas.

Employment

The high population growth in the past few decades has led to a significant number of young people entering the labor market. Although Pakistan is among the six most populous Asian nations, excessive red tape in the past made firing from jobs, and consequently hiring, difficult.[55] Significant progress in taxation and business reforms has ensured that many firms are no longer compelled to operate in the underground economy.[56]

Government revenues and expenditures

Clifton in Karachi.

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 more than 80% of the entire national tax collection. The government's revenue streams primarily stem from two sources: taxation and non-tax revenue. Taxation, which includes income tax, sales tax, and customs duties, constitutes a substantial portion of revenues, bolstering both federal and provincial government finances. Non-tax revenue sources, such as mark-up from state enterprises, surplus profits from the State Bank of Pakistan, and royalties on oil and gas, further contribute significantly to the fiscal framework.

Conversely, government expenditures are strategically allocated across multiple sectors, including defense, social services, infrastructure development, and debt servicing. Current expenditures, covering operational costs, interest payments, pensions, and other obligations, are carefully balanced against development expenditures aimed at fostering long-term growth and progress. The challenge of achieving equilibrium between revenue generation and expenditure allocation leads to budgetary deficits that can necessitate borrowing to bridge the gap.

The data has been sourced from the Ministry of Finance.[57]

Consolidated Federal and Provincial Fiscal Operations (Amounts in billion PKR)
List 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 FY 2021 FY 2022 FY 2023
Total Revenue Increase 1,499 Increase 1,851 Increase 2,078 Increase 2,253 Increase 2,567 Increase 2,982 Increase 3,637 Increase 3,931 Increase 4,447 Increase 4,937 Increase 5,228 Decrease 4,901 Increase 6,272 Increase 6,903 Increase 8,035 Increase 9,634
Tax Revenue Increase 1,065 Increase 1,317 Increase 1,473 Increase 1,699 Increase 2,053 Increase 2,199 Increase 2,565 Increase 3,018 Increase 3,660 Increase 3,969 Increase 4,467 Increase 4,473 Increase 4,748 Increase 5,272 Increase 6,755 Increase 7,819
FBR Taxes Increase 1,008 Increase 1,161 Increase 1,327 Increase 1,558 Increase 1,883 Increase 1,946 Increase 2,255 Increase 2,590 Increase 3,113 Increase 3,368 Increase 3,842 Decrease 3,830 Increase 3,998 Increase 4,764 Increase 6,143 Increase 7,169
Total Expenditure Negative increase 2,277 Negative increase 2,531 Negative increase 3,007 Negative increase 3,447 Negative increase 3,936 Negative increase 4,816 Negative increase 5,026 Negative increase 5,388 Negative increase 5,796 Negative increase 6,801 Negative increase 7,488 Negative increase 8,346 Negative increase 9,649 Negative increase 10,307 Negative increase 13,295 Negative increase 16,155
Fiscal Deficit Negative increase777 Positive decrease680 Negative increase929 Negative increase1,194 Negative increase1,370 Negative increase1,834 Positive decrease1,389 Negative increase1,457 Positive decrease1,349 Negative increase1,864 Negative increase2,260 Negative increase3,445 Positive decrease3,376 Negative increase3,403 Negative increase5,260 Negative increase6,521
As % of GDP
Total Revenue Increase14.1 Decrease14.0 Steady14.0 Decrease12.3 Increase12.8 Increase13.3 Increase14.5 Decrease14.3 Decrease13.6 Increase13.9 Decrease13.3 Decrease11.2 Increase13.2 Decrease12.4 Decrease12.0 Decrease11.4
Tax Revenue Increase9.9 Decrease9.1 Increase9.9 Decrease9.3 Increase10.2 Decrease9.8 Increase10.2 Increase11.0 Decrease10.4 Steady10.4 Increase10.8 Decrease9.7 Decrease9.3 Decrease9.4 Increase10.1 Decrease9.2
Total Expenditure Negative increase21.4 Positive decrease19.2 Negative increase20.2 Positive decrease18.9 Negative increase21.4 Negative increase21.5 Positive decrease20.0 Positive decrease19.6 Positive decrease17.7 Negative increase19.1 Steady19.1 Steady19.1 Negative increase20.3 Positive decrease18.5 Negative increase19.9 Positive decrease19.1
Fiscal Deficit Negative increase7.3 Positive decrease5.2 Negative increase6.2 Negative increase6.5 Negative increase8.8 Positive decrease8.2 Positive decrease5.5 Positive decrease5.3 Positive decrease4.1 Negative increase5.2 Negative increase5.8 Negative increase7.9 Positive decrease7.1 Positive decrease6.1 Negative increase7.9 Positive decrease7.7

Currency system

Rupee

Pakistani Rupee banknotes.

The basic unit of currency is the rupee, ISO code PKR, and abbreviated Rs, which is divided into 100 paisas. Currently, the 5,000 rupee note is the largest denomination in circulation. From 13 August 2005, the SBP started introducing its fifth generation design of banknotes with additional security features, with the Rs. 20 note being the first issuance. New designs of Rs. 5 (July 2008, later replaced by a coin), 10 (May 2006), Rs. 20 (March 2008, new color scheme), Rs. 50 (July 2008), Rs. 100 (November 2006), Rs. 500 (January 2010), Rs. 1000 (February 2007), and Rs. 5000 (May 2006) were gradually introduced.[58][59][60]

The Pakistani rupee was pegged to the pound sterling until 1982, when the government of General Zia-ul-Haq, changed it to a managed float regime. As a result, the rupee devalued by 38.5% between 1982/83, and many of the industries built by his predecessor suffered 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 stabilized by lowering interest rates and buying dollars, in order to preserve the country's export competitiveness.

US$ to PKR average exchange rates[61]
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
62.55 78.50 83.80 85.50 89.23 96.73 102.86 101.29 104.23 104.70 109.84 136.09 158.02 160.02 177.45 248.04

Foreign exchange reserves

Pakistan maintains foreign reserves with the State Bank of Pakistan. The currency of the reserves was solely the 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 the ratio of diversification.

Karachi the economic capital of Pakistan.

Following the international credit crisis and spikes in crude oil prices, Pakistan's economy could not withstand the pressure, and on 11 October 2008, the State Bank of Pakistan reported that the country's foreign exchange reserves had gone down by $571.9 million to $7,749.7 million.[62] The foreign exchange reserves had declined by more than $10 billion to a level of $6.59 billion. In June 2013, Pakistan was on the brink of default on its financial commitments. The country's forex reserves were at a historic low, covering only two weeks' worth of imports. In January 2020, Pakistan's foreign exchange reserves stood at US$11.503 billion.[63]

Amounts in Billion US dollars[64][65]
List Jun 2008 Jun 2009 Jun 2010 Jun 2011 Jun 2012 Jun 2013 Jun 2014 Jun 2015 Jun 2016 Jun 2017 Jun 2018 Jun 2019 Jun 2020 Jun 2021 Jun 2022 Jun 2023
Total Reserves Decrease 11.4 Increase 12.4 Increase 16.8 Increase 18.2 Decrease 15.3 Decrease 11.0 Increase 14.1 Increase 18.7 Increase 23.1 Decrease 21.4 Decrease 16.4 Decrease 14.5 Increase 18.9 Increase 24.4 Decrease 15.5 Decrease 9.2
SBP Reserves 8.6 9.1 13.0 14.8 10.8 6.0 9.1 13.5 18.1 16.1 9.8 7.3 12.1 17.3 9.9 4.5
Banks Reserves 2.8 3.3 3.8 3.5 4.5 5.0 5.0 5.2 5.0 5.3 6.6 7.2 6.8 7.1 5.6 4.7

Structure of economy

Agriculture accounted for about 53% of the 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.

Sectoral Shares % in GDP (at constant basic prices)[66]
Sectors FY 2000 FY 2005 FY 2010 FY 2015 FY 2020 FY 2023
Agricultural Decrease 31.75 Decrease 28.15 Decrease 25.89 Decrease 24.83 Decrease 23.53 Decrease 22.91
Industrial Increase 16.73 Increase 19.01 Increase 19.04 Increase 19.11 Decrease 18.53 Decrease 18.47
Services Increase 51.52 Increase 52.84 Increase 55.07 Increase 56.06 Increase 57.94 Increase 58.61

Major sectors

Agriculture

Yellow and green fields in Punjab.

The majority of the population, directly or indirectly, is dependent on this sector, contributing about 23.0% of the gross domestic product (GDP) and accounting for 37.4% of the employed labor force in 2021. It is the largest source of foreign exchange earnings.[67] The most important crops are wheat, sugarcane, cotton, and rice, accounting 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.[68] In the previous market year of 2018/19, Pakistan exported a record 4.5 million tonnes of rice compared to around 4 MMT during the corresponding period in the previous year.[69]

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.[70] 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.

% growth[49][71][72]
List 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 FY 2021 FY 2022
Agriculture sector Increase 0.81 Increase 3.41 Increase 0.31 Increase 2.71 Increase 3.23 Increase 3.14 Increase 2.42 Increase 1.78 Increase 0.41 Increase 2.22 Increase 3.88 Increase 0.94 Increase 3.91 Increase 3.52 Increase 4.27
Production of Important Crops (Million Tonnes)
Wheat Decrease 20.9 Increase 24.0 Decrease 23.3 Increase 25.2 Decrease 23.5 Increase 24.2 Increase 26.0 Decrease 25.1 Increase 25.6 Increase 26.7 Decrease 25.1 Decrease 24.3 Increase 25.2 Increase 27.5 Decrease 26.4
Rice Increase 5.6 Increase 6.9 Steady 6.9 Decrease 4.8 Increase 6.2 Decrease 5.6 Increase 6.8 Increase 7.0 Decrease 6.8 Steady 6.8 Increase 7.5 Decrease 7.2 Increase 7.4 Increase 8.4 Increase 9.3
Sugarcane Increase 63.9 Decrease 50.0 Decrease 49.4 Increase 55.3 Increase 58.4 Increase 63.8 Increase 67.5 Decrease 62.8 Increase 65.5 Increase 75.5 Increase 83.3 Decrease 67.2 Decrease 66.4 Increase 81.0 Increase 88.7
Cotton * Decrease 11.7 Increase 11.8 Increase 12.9 Decrease 11.5 Increase 13.6 Decrease 13.0 Decrease 12.8 Increase 14.0 Decrease 9.9 Increase 10.7 Increase 11.9 Decrease 9.9 Decrease 9.1 Decrease 7.1 Increase 8.3
Maize Increase 3.6 Steady 3.6 Decrease 3.3 Increase 3.7 Increase 4.3 Decrease 4.2 Increase 5.0 Decrease 4.9 Increase 5.3 Increase 6.1 Decrease 5.9 Increase 6.8 Increase 7.9 Increase 8.9 Increase 9.5

* Cotton production in million bales.

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. Zarai Taraqiati Bank Limited is the largest financial institution geared towards the development of the agriculture sector through the provision of financial services and technical expertise.

Industry

Factory in Pakistan.

Pakistan's industrial sector accounts for approximately 19.12% of GDP.[66] In 2021, it recorded a growth of 7.81%, compared to the negative 5.75% in 2020.[71] 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 the Pakistani economy.[73] 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 to the total GDP of Pakistan. According to SMEDA and Economic survey reports, the share in the annual GDP is 40%, with SMEs generating significant employment opportunities for skilled workers and entrepreneurs. Small and medium-scale firms represent nearly 90% of all enterprises in Pakistan and employ 80% of the non-agricultural labor force. These figures indicate the potential and further growth in this sector.

% growth[71]
List 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 FY 2021 FY 2022
Industrial sector Increase 8.78 Decrease -4.15 Increase 3.95 Increase 4.87 Increase 2.33 Increase 1.16 Increase 4.34 Increase 5.40 Increase 6.01 Increase 4.61 Increase 9.18 Increase 0.25 Decrease -5.75 Increase 8.20 Increase 6.83
Manufacturing Increase 6.14 Decrease -3.94 Increase 1.73 Increase 2.61 Increase 2.01 Increase 5.37 Increase 5.76 Increase 4.12 Increase 4.03 Increase 4.87 Increase 7.08 Increase 4.52 Decrease -7.80 Increase 10.52 Increase 10.86
Mining Increase 3.70 Decrease -1.04 Increase 2.42 Decrease -4.04 Increase 5.26 Increase 1.77 Increase 1.02 Increase 3.95 Increase 5.64 Decrease -0.89 Increase 7.26 Increase 0.54 Decrease -7.17 Increase 1.72 Decrease -7.00
Construction Increase13.37 Decrease-6.70 Increase7.27 Decrease-7.97 Increase2.17 Increase5.40 Increase3.19 Increase8.33 Increase14.37 Increase10.20 Increase19.55 Decrease-18.14 Decrease-3.08 Increase 2.39 Increase 1.90

Manufacturing

It is the largest of Pakistan's industrial sectors, accounting for approximately 12.13% of GDP.[74] The manufacturing sub-sector is further divided into three components: large-scale manufacturing (LSM) with a share of 79.6% in the manufacturing sector, small-scale manufacturing with a share of 13.8% in the manufacturing sector, while slaughtering contributes 6.5% to manufacturing.[75] Major sectors in industries include cement, fertiliser, edible oil, sugar, steel, tobacco, chemicals, machinery, food processing, and medical instruments, primarily surgical.[76][77][78] Pakistan is one of the largest manufacturers and exporters of surgical instruments.[79][80]

Production of Selected Manufactured Goods[81]
Manufactured Goods Unit of quantity 2016 2017 2018 2019 2020 2021 2022 2023
Cotton Yarn Metric Tonne (000) 3,406 Increase3,428 Increase3,430 Increase3,431 Decrease3,060 Increase3,442 Increase3,459 Decrease2,695
Jute Goods 55 Increase60 Increase74 Decrease67 Decrease65 Increase70 Decrease58 Increase63
Cooking Oil 380 Increase390 Increase391 Increase406 Increase442 Increase460 Increase510 Increase567
Sugar 5,115 Increase7,049 Decrease6,566 Decrease5,260 Decrease4,881 Increase5,694 Increase7,921 Decrease6,709
Cement 35,432 Increase37,022 Increase41,148 Decrease39,924 Decrease39,121 Increase49,797 Decrease48,011 Decrease41,448
Paper & Board 610 Increase669 Increase731 Decrease704 Increase707 Increase730 Increase825 Decrease792
Caustic Soda 225 Decrease224 Increase270 Decrease247 Increase342 Increase394 Increase405 Increase476
Hydrogen Chloride 172 Increase177 Increase251 Increase425 Decrease361 Increase417 Increase510 Increase525
Sulphuric Acid 75 Decrease56 Decrease49 Steady49 Decrease40 Increase72 Increase111 Decrease71
Vegetable Ghee Liters (000) 1,241 Increase1,280 Increase1,347 Increase1,392 Increase1,454 Increase1,455 Decrease1,393 Increase1,554
Cotton Cloth Million Meters 1,039 Increase1,043 Increase1,044 Increase1,046 Decrease935 Increase1,048 Increase1,051 Decrease921
Cigarettes Billion Numbers 54 Decrease34 Increase59 Increase61 Decrease46 Increase52 Increase60 Decrease43
Nitrogenous Fertilizers NT (000) 3,018 Increase3,063 Decrease2,758 Increase2,990 Increase3,139 Increase3,324 Increase3,391 Decrease3,163
Phosphatic Fertilizers 664 Increase683 Decrease619 Increase633 Decrease631 Increase748 Increase804 Decrease616
Cycle Tyres & Tubes Numbers (000) 11,490 Increase11,507 Decrease11,470 Increase14,491 Decrease13,496 Decrease10,314 Increase10,876 Decrease10,702
Motor Tyres & Tubes 34,202 Increase34,345 Increase35,057 Increase36,321 Decrease35,678 Decrease31,906 Decrease30,296 Increase30,515
Motorcycle 2,071 Increase2,501 Increase2,825 Decrease2,460 Decrease1,813 Increase2,476 Decrease2,190 Decrease1,289
Bicycle 199 Increase200 Steady200 Decrease174 Decrease141 Decrease79 Increase141 Increase146
Electric Transformers 33 Increase37 Increase47 Decrease31 Decrease23 Increase29 Increase35 Decrease32
Refrigerators 1,477 Increase1,834 Decrease1,348 Decrease1,084 Decrease716 Increase1,351 Increase1,389 Decrease1,008
Air Conditioners 388 Increase471 Decrease451 Increase518 Decrease216 Increase508 Increase540 Decrease347
Electric Fans 2,033 Increase2,523 Increase2,596 Decrease2,591 Decrease2,124 Increase2,499 Increase2,600 Decrease2,182
Electric Meters 1,310 Increase1,923 Decrease1,715 Decrease1,550 Decrease1,039 Increase1,419 Increase2,030 Increase2,038
Motor Spirits/Petrol Million Liters 2,216 Increase2,518 Increase2,988 Increase3,085 Decrease2,684 Increase3,424 Decrease3,392 Decrease3,051
High Speed Diesel 5,236 Increase5,467 Increase6,283 Decrease5,665 Decrease4,529 Increase5,612 Increase5,615 Decrease4,655
Furnace Oil 3,080 Increase3,215 Increase3,478 Decrease3,063 Decrease2,370 Increase2,717 Decrease2,567 Decrease2,191
Jeeps & Cars Numbers 180,717 Increase193,996 Increase231,738 Decrease218,845 Decrease106,764 Increase182,389 Increase271,923 Decrease131,978
Tractors Numbers 34,914 Increase53,975 Increase71,894 Decrease49,902 Decrease32,608 Increase50,700 Increase58,922 Decrease31,752
Trucks & Buses Numbers 8,331 Increase10,548 Increase13,425 Decrease9,684 Decrease4,848 Increase5,977 Increase7,934 Decrease4,839

Pakistan's largest corporations are primarily engaged in utilities such as oil, gas, electricity, automobile, cement, food, chemicals, fertilizer, civil aviation, textile, and telecommunication.

Their assets, sales, and profit/loss for the year 2022 are listed below:[50]

Amounts are in Billion PKR
Name Total Assets Sales Profit / (Loss) after Tax
Oil and Gas Development Co. Ltd. 1129.98 335.46 133.78
Pakistan State Oil Co. Ltd. 899.45 2451.58 86.22
Sui Northern Gas Pipelines Limited 1268.11 1293.68 10.37
K-Electric 1060.13 518.78 8.52
Sui Southern Gas Co. Ltd 636.07 296.13 2.26
Pakistan Petroleum Ltd. 624.95 202.20 53.55
Lucky Cement Ltd. 503.69 331.46 36.42
Fauji Fertilizer Co. Ltd. 327.92 125.68 34.37
The Hub Power Co. Ltd. 315.15 97.16 29.58
Indus Motor Co. Ltd. 213.97 275.51 15.80
Shell Pakistan Ltd. 101.73 412.70 (72.31)
Attock Petroleum Ltd. 96.35 370.08 18.54
Engro Fertilizers Ltd. 145.41 157.02 16.00
Fatima Fertilizer Co. Ltd. 222.51 152.23 14.12
Pak Suzuki Motor Co. Ltd. 110.08 202.47 (6.34)
National Refinery Ltd. 102.71 251.88 9.08
Pakistan Telecommunication Co. Ltd. 643.39 151.64 (7.79)
Pakistan International Airlines Corporation Ltd. 321.27 178.55 (17.54)
Fauji Fertilizer Bin Qasim Ltd. 149.86 159.23 2.33
Nestle Pakistan Ltd. 65.40 133.30 12.77
Nishat Mills Ltd. 137.54 115.77 10.31
Packages Ltd. 117.69 80.32 7.15
Atlas Honda Ltd. 47.42 131.93 5.59
Attock Refinery Ltd. 111.53 127.84 (2.23)
Pakistan Tobacco Co. Ltd. 71.06 94.86 21.32
Engro Polymer & Chemicals Ltd. 85.40 82.06 11.69
Bestway Cement Ltd. 133.44 72.37 10.24
Gul Ahmed Textile Mills Ltd. 123.62 121.81 9.85
Cement industry

In 1947, Pakistan inherited four cement plants with a total capacity of 0.5 million tons. Some expansion occurred in 1956–66 but couldn't keep pace with economic development. The country resorted to cement imports in 1976–77, continuing until 1994–95. The cement sector, comprising 27 plants, contributes over Rs 30 billion to the national exchequer in taxes. By 2013, Pakistan's cement industry grew rapidly, driven by demand from Afghanistan and countries boosting the real estate sector. In April 2020, the government introduced an incentive package for the construction industry, including an amnesty scheme, tax exemptions, and a Rs 36 billion subsidy for Naya Pakistan Housing Scheme. Additionally, banks were directed to increase construction sector loans to 5 percent of their total loan book, and FED reduction on cement from Rs 2/kg to Rs 1.5/kg provided further impetus to the industry.[82]

Cement production capacity & dispatches (million tonnes)[83][84]
Indicators 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Production Capacity 37.68 42.28 45.34 42.37 44.64 44.64 44.64 45.62 45.62 46.39 48.66 59.74 63.63 69.26 69.92 83.18
Local Dispatches 22.58 20.33 23.57 22.00 23.95 25.06 26.15 28.20 33.00 35.65 41.15 40.34 39.97 48.12 47.64 40.01
Exports 7.72 10.98 10.65 9.43 8.57 8.37 8.14 7.20 5.87 4.66 4.75 6.54 7.85 9.31 5.26 4.57
Total Dispatches 30.30 31.31 34.22 31.43 32.52 33.43 34.28 35.40 38.87 40.32 45.89 46.88 47.81 57.43 52.89 44.58
Fertilizer industry

Fertilizer is a crucial and costly input responsible for a 30 to 50 percent increase in crop productivity. The overall objective is sustainability and growth in the agricultural sector to match the growing population for food security and the promotion of economic growth. There are nine urea manufacturing plants, one DAP, three NP, four SSP, two CAN, one SOP, and two plants of blended NPKs with a total production capacity of 9,172 thousand tonnes per annum in 2021. Urea is the main fertilizer, holding a 70 percent share in total production. The installed production capacity of 6,307 thousand tonnes per annum is sufficient to meet local demand, subject to the availability of uninterrupted gas and RLNG supply.

Fertilizer Offtake by Nutrients ('000 tonnes)[85]
Nutrients 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Nitrogen 2925 3034 3476 3133 3207 2853 3185 3308 2672 3730 3435 3408 3415 3711
Phosphorus 630 651 860 767 633 747 881 975 1007 1269 1279 1153 1084 1228
Potassium 27 25 24 32 21 21 24 33 20 41 50 53 50 69
Defence industry
Captured Tank in Pakistan Army Museum

The defence industry of Pakistan, under the Ministry of Defence Production, was established in September 1951 to promote and coordinate the array of military production facilities that have emerged since independence. It is actively engaged in numerous joint production projects, such as the Al Khalid 2 tank, advanced trainer aircraft, combat aircraft, artillery systems like MRLS, combat and surveillance drones like GIDS Shahpar-1 and Shahpar-2, battle management and surveillance radars, electronic warfare systems, navy ships, and submarines.

Pakistan manufactures and sells weapons to over 40 countries, including European customers, generating $620 million annually. The country's sophisticated arms imports increased by 119 percent between 2004–2008 and 2009–13, with China providing 54 percent and the USA 27 percent of Pakistan's imports.

Textiles industry

Most of the Textile Industry is concentrated in Punjab. However, before 1990, the industry was predominantly located in Karachi.

Presently, the textile industry comprises two main segments: a highly organized large-scale sector and a considerably fragmented cottage/small-scale sector. The organized sector mainly includes integrated Textile Mills, housing numerous spinning units and a limited number of shuttle-less loom units. Conversely, the unorganized sector encompasses downstream industries like Weaving, Finishing, Garment, Towels, and Hosiery, all of which possess significant export potential. Within this sector, certain enterprises have expanded to an international scale and exhibit progressive business philosophies.

Sunday textile market on the sidewalks of Karachi, Pakistan.

As of June 2021, the Pakistani textile industry comprises 517 textile units, including 40 composite units and 477 spinning units. This landscape also includes 28,500 shuttle-less looms and 375,000 conventional looms. The growth of the Spinning Sector has been fueled by export demands and cotton production, with subsequent growth observed in the Weaving & Processing Sector. Notably, independent air-jet weaving units have emerged, both as standalone entities and in conjunction with spinning or processing units.

A notable trend is the ongoing backward integration of some clothing units, while spinning units are actively developing weaving, finishing, and assembly capabilities to create a comprehensive supply chain. This symbiotic relationship between the Textile and Clothing sectors is leading to horizontal and vertical integration, often managed by the same entities or through business collaborations.[86]

This sector contributes nearly one-fourth of industrial value-added and provides employment to about 40 percent of the industrial labor force. Excluding seasonal and cyclical fluctuations, textile products have maintained an average share of about 60 percent in national exports.

Automobile Industry
Cars on Shahrah-e-Faisal in Karachi.

The auto sector constitutes about 7 percent of LSM in 2021, contributing significantly to the country's industrial output. According to PBS, the automobile industry recorded a 23.4 percent upsurge during July–March FY2021. In 2021, the government announced Pakistan's new Auto Policy 2021–2026.[87] Given government support and the removal of obstacles, the industrial expansion is expected to yield positive results soon. Many new investors have joined with commercial production, while existing players have already made substantial investments, with more in the pipeline. Among the automakers yet to start production, Proton, MG, and Volkswagen are poised to make a significant impact in the local passenger vehicle market. Meanwhile, KIA, Hyundai, Changan, and Prince DFSK have already commenced productions in Pakistan.[88]

Production & Sale of Vehicles[89]
Type 2006 2011 2016 2017 2018 2019 2020 2021 2022 2023
Car P 170,487 133,972 179,944 188,936 217,774 209,255 94,325 151,794 226,433 101,984
S 165,965 127,944 181,145 185,781 216,786 207,630 96,455 151,182 234,180 96,811
Truck P 4,518 2,901 5,666 7,712 9,326 6,035 2,945 3,808 5,659 3,072
S 4,273 2,942 5,550 7,499 9,331 5,828 3,088 3,695 5,802 3,182
Bus P 825 490 1,070 1,118 803 913 532 570 661 701
S 927 515 1,017 1,130 762 935 559 652 696 654
Jeep & Pick-Up P 21,624 20,025 36,609 27,795 42,778 31,978 15,633 31,073 44,421 31,333
S 21,471 18,553 36,534 27,338 42,006 33,016 15,507 30,215 45,087 30,067
Farm Tractor P 48,887 70,770 34,914 53,975 71,894 49,902 32,608 50,751 58,880 31,726
S 48,802 69,203 33,986 54,992 70,887 50,405 32,727 50,920 58,947 30,942
2/3 Wheelers P 520,124 838,665 1,362,096 1,632,965 1,928,757 1,782,605 1,370,417 1,902,415 1,826,467 1,185,532
S 516,640 835,455 1,358,643 1,630,735 1,931,340 1,781,959 1,370,005 1,903,932 1,821,885 1,186,969

Note: These figures do not include the production/sale of companies which are not members of the Pakistan Automotive Manufacturers Association (PAMA).

After the entry of new models and brands by new entrants and due to the significantly low benchmark interest rate of 7%, consumer financing hit an all-time high in 2021. This trend started when a new Automotive Development Policy (2016-2021) was first approved by the ECC in its meeting held on March 18, 2016.

Such growth in demand for car financing was last seen during President Pervez Musharraf's regime (2001-2008) when banks, having ample liquidity, lent a significant amount for cars without checking borrowers’ capabilities to repay the debt. Later on, the car financing bubble burst when a large number of people defaulted on paying off the car financing.

Outstanding Loans of Consumer Financing for Automobiles (Billion PKR)[53]
Jun 2006 Jun 2007 Jun 2010 Jun 2015 Jun 2016 Jun 2017 Jun 2018 Jun 2019 Jun 2020 Jun 2021 Jun 2022 Jun 2023
97.78 105.44 64.20 85.12 111.96 154.25 193.60 215.46 211.11 308.10 367.85 293.728

Mining

Khewra Salt Mine in the Jhelum District.

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 the 18th amendment to the constitution, all the provinces are free to exploit and explore the mineral resources within their jurisdiction.

Mining and quarrying contribute 13.19% to the industrial sector, with its share in GDP being 2.4%.

In the recent past, exploration by government agencies as well as multinational mining companies presents ample evidence of the occurrences of sizeable mineral 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 with 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 8 fiscal years is given in the table below:[90]

Minerals Unit of Quantity 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23
Coal Metric ton (000) 3,407 Increase3,750 Increase3,954 Increase4,478 Increase5,407 Increase8,428 Increase9,230 Increase9,678 11,864
Natural Gas MMCFT (000) 1,466 Increase1,482 Decrease1,472 Decrease1,459 Decrease1,437 Decrease1,317 Decrease1,279 Increase1,308 1,190
Crude Oil JSB (000) 34,490 Decrease31,652 Increase32,269 Increase32,557 Decrease32,495 Decrease28,091 Decrease27,560 Increase28,098 25,360
Chromite Metric ton 100,516 Decrease69,333 Increase105,238 Decrease97,420 Increase138,244 Decrease121,435 Increase134,000 Increase195,000 166,000
Dolomite Metric ton 223,117 Increase666,755 Decrease301,124 Increase488,825 Decrease472,474 Decrease302,045 Increase388,000 Increase487,000 554,000
Gypsum Metric ton (000) 1,417 Increase1,872 Increase2,080 Increase2,476 Increase2,518 Decrease2,150 Increase2,527 Decrease2,325 1,614
Limestone Metric ton (000) 40,470 Increase46,123 Increase52,149 Increase70,819 Increase75,596 Decrease65,810 Increase76,632 Decrease58,362 55,675
Rock salt Metric ton (000) 2,136 Increase3,553 Decrease3,534 Increase3,654 Increase3,799 Decrease3,369 Decrease3,366 Decrease2,716 2,808
Sulphur Metric ton 19,730 Decrease14,869 Increase23,740 Decrease22,040 Decrease20,715 Decrease19,948 Decrease19,000 Decrease16,000 12,000
Barytes Metric ton 24,689 Increase57,024 Increase75,375 Increase145,189 Decrease116,480 Decrease55,341 Decrease52,000 Increase128,000 194,000
Marble Metric ton (000) 2,816 Increase4,747 Increase4,906 Increase8,813 Decrease7,736 Decrease5,797 Increase7,917 Decrease6,626

Energy

Wind power plant between Karachi and Hyderabad.

Main sources of Pakistan's primary energy supplies include Gas, Oil, Coal, imported Liquefied natural gas (LNG), and Hydroelectricity, with shares of 33.1%, 22.6%, 18.3%, 10.3%, and 9.9% respectively in 2020. Since coal mining began in the Thar desert and LNG imports from Qatar, Coal and imported LNG have increased their shares manyfold in just 5 years in the primary energy supplies of the country. The share of Gas has decreased from 50% in 2005 to 33% in 2020, and oil, since 2015, from 35% to 23% in 2020, being largely replaced by Coal and LNG. As Pakistan intends to generate around 8,800 megawatts of nuclear power by 2030 and 40,000 megawatts by 2050, its share is also increasing gradually.

Primary Energy Supplies by Source[91]
Fiscal Year Unit Gas Oil Coal LNG

Import

Hydro

Electricity

Nuclear

Electricity

LPG Renewable

Electricity

Imported

Electricity

Total
2005 MTOE Increase 27.95 Increase 16.33 Increase 4.23 - Decrease 6.13 Increase 0.67 Increase 0.25 - Increase 0.03 Increase 55.59
%Share Increase 50.3 Decrease 29.4 Increase 7.6 - Decrease 11.0 Increase 1.2 Increase 0.5 - Increase 0.0 100
2010 MTOE Increase 30.81 Increase 19.81 Increase 4.62 - Increase 6.71 Increase 0.69 Increase 0.40 - Increase 0.06 Increase 63.09
%Share Decrease 48.8 Increase 31.4 Decrease 7.3 - Decrease 10.6 Decrease 1.1 Increase 0.6 - Increase 0.1 100
2015 MTOE Decrease 29.98 Increase 24.97 Increase 4.95 Increase 0.47 Increase 7.75 Increase 1.38 Increase 0.46 Increase 0.19 Increase 0.11 Increase 70.26
%Share Decrease 42.7 Increase 35.5 Decrease 7.0 Increase 0.7 Increase 11.0 Increase 2.0 Increase 0.7 Increase 0.3 Steady 0.1 100
2020 MTOE Decrease 26.66 Decrease 18.19 Increase 14.71 Increase 8.32 Increase 8.02 Increase 2.58 Increase 1.03 Increase 0.99 Increase 0.12 Increase 80.62
%Share Decrease 33.1 Decrease 22.6 Increase 18.3 Increase 10.3 Decrease 9.9 Increase 3.2 Increase 1.3 Increase 1.2 Increase 0.2 100

(CPPA-G) procures electricity from power producers, and the National Transmission and Despatch Company (NTDC) transmits this electricity via its transmission lines to Distribution Companies (DISCOs), which then distribute this electricity via their distribution lines to end consumers. Balancing Pakistan's supply of electricity against the demand has been a longstanding unresolved issue. Since 2018, there has been an improvement in the availability of electricity due to the substantial increase in generation capacity. However, the cost of electricity has risen due to various factors such as circular debt, fuel costs, currency devaluation, low recovery rates, and Transmission and Distribution losses. Pakistan faces a significant challenge in overhauling its electricity supply network.

NEPRA Reports[91]
indicator 2010 2013 2016 2017 2018 2019 2020 2021 2022
Installed Capacity (MW) Increase 22,064 Increase 23,725 Increase 25,421 Increase 28,712 Increase 35,979 Increase 38,995 Decrease 38,719 Increase 39,772 Increase 43,775
Electricity Generation (GWh) Increase 100,020 Decrease 98,655 Increase 114,093 Increase 120,622 Increase 133,588 Increase 137,005 Decrease 134,242 Increase 143,589 Increase 153,874
Electricity Consumption (GWh) Increase 78,768 Increase 81,389 Increase 94,354 Increase 99,616 Increase 110,891 Increase 113,142 Decrease 112,071 Increase 121,206 Increase 133,665
Transmission losses (%) Positive decrease 3.15 Positive decrease 3.05 Positive decrease 2.57 Positive decrease 2.31 Negative increase 2.43 Negative increase 2.83 Positive decrease 2.76 Negative increase 2.78 Positive decrease 2.62
Distribution losses (%) Negative increase 18.37 Negative increase 18.59 Positive decrease 18.14 Positive decrease 17.93 Negative increase 18.32 Positive decrease 17.61 Negative increase 18.86 Positive decrease 17.95 Positive decrease 17.13
(%) share in Electricity Generation
Hydel Decrease 28.56 Increase 30.44 Decrease 30.29 Decrease 26.59 Decrease 21.01 Increase 24.16 Increase 28.83 Decrease 27.02 Decrease 23.10
Thermal Increase 68.50 Decrease 64.91 Decrease 64.57 Increase 65.34 Increase 68.87 Decrease 65.25 Decrease 60.21 Increase 61.76 Decrease 60.50
Nuclear Decrease 2.67 Increase 4.24 Decrease 3.70 Increase 5.20 Increase 6.78 Decrease 6.67 Increase 7.37 Increase 7.72 Increase 11.89
Renewable Energy Increase 0.01 Increase 0.03 Increase 1.04 Increase 2.45 Increase 2.92 Increase 3.57 Decrease 3.21 Decrease 3.15 Increase 4.18
Import 0.42 Decrease 0.36 Increase 0.38 Decrease 0.35 Decrease 0.33

The total demand for petroleum products remained at 23.1 million tonnes during FY2022. The transport and power sectors are major petroleum consumers, covering approximately 90 percent of the total demand.[92]

Sectoral Consumption of Petroleum Products (FY 2022)
Sector Domestic Industry Agriculture Transport Power Government Overseas Total
Quantity (000) MT 29.522 1,332.899 11.822 17,409.035 3,683.322 373.489 250.121 23,090.210

Pakistan is an importer of petroleum products and crude oil. Imports of petroleum products during FY2022 amounted to around 12.9 million tonnes, valued at more than US$ 11.1 billion. The major imported products are Motor Spirit/Gasoline, High-Speed Diesel, and Furnace Oil, with import quantities of 6,502 thousand tonnes, 3,950 thousand tonnes, and 2,258 thousand tonnes, respectively.

Import of Petroleum Products (FY 2022)
Product MS HOBC HSD FO JP-1 Total
Quantity (000) MT 6,502.07 125.62 3,949.97 2,258.20 53.87 12,889.730
Value Million US$ 6,070.38 115.94 3,462.71 1,414.40 47.42 11,110.852

The total production of refineries in Pakistan for the fiscal year 2020-21 reached 10.66 million tons. Among these refineries, PARCO holds the largest share, accounting for 41%, followed by ARL, BPPL, NRL, and PRL with shares of 17%, 16%, 14%, and 12% respectively. OGRA, founded in March 2002, serves as the regulatory body with the primary goals of promoting competition and enhancing private investment and ownership within the petroleum sector by implementing effective and efficient regulations. Oil Marketing Companies (OMCs) have established their infrastructure, including storage facilities and retail outlets, to market Petroleum, Oil, and Lubricant (POL) products. Motor Spirit (MS) and High-Speed Diesel (HSD) together make up nearly 80% of OMCs' sales. By the conclusion of the fiscal year 2021, OMCs had developed a storage capacity of 0.58 million tons for MS and 0.88 million tons for HSD, distributed across various depots throughout the country. Oil Marketing Companies (OMCs) operate a total of 9,978 retail outlets nationwide. Among these, Pakistan State Oil (PSO) holds the highest number of retail outlets, boasting 3,158 outlets, which accounts for approximately 31.65 percent of the total.[93]

Indigenous natural gas supplies accounted for approximately 30 percent of Pakistan's total primary energy supply mix in FY2022. Pakistan maintains an extensive gas network comprising over 13,775 kilometers of transmission pipelines, 157,395 kilometers of main pipelines, and 41,352 kilometers of service pipelines. This network serves the needs of more than 10.7 million consumers throughout the country. During FY 2021-22, the natural gas supply in Pakistan reached 3,982 MMCFD. The country relies on several major gas fields, including Sui, Uch, Qadirpur, Sawan, Zamzama, Badin, Bhit, Kandhkot, Mari, and Manzalai, to meet its domestic demand. Additionally, Pakistan has been importing Liquefied Natural Gas (LNG) since 2015, with Regasified Liquefied Natural Gas (RLNG) playing a significant role in alleviating natural gas shortages. In the year 2021-22, approximately 24 percent of the country's gas supplies were sourced from imported RLNG.

In FY 2020-21, the primary consumer of natural gas was the power sector, which accounted for more than 30 percent of the total consumption, equivalent to 1,208 MMCFD. Following the power sector, the domestic sector consumed 21 percent, or 850 MMCFD, while the fertilizer sector consumed 20 percent, totaling 834 MMCFD.[93]

Services

Pakistan's service sector contributes approximately 61.7% to the GDP.[66] Within this sector, transport, storage, communications, finance, and insurance comprise 24%, while wholesale and retail trade constitute about 30%. Pakistan is actively promoting the growth of the information industry and other modern service industries by offering incentives such as long-term tax holidays.

% growth[71]
List 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 FY 2021 FY 2022
Service sector Increase 4.72 Increase 1.84 Increase 2.63 Increase 2.86 Increase 3.48 Increase 5.13 Increase 3.82 Increase 4.20 Increase 5.03 Increase 5.62 Increase 5.95 Increase 5.00 Decrease -1.21 Increase 5.91 Increase6.59

Telecommunication

PTCL's One Stop Shop in Islamabad

After the deregulation of the telecommunications industry, the sector has experienced exponential growth. Pakistan Telecommunication Company Ltd (PTCL) has emerged as a successful Forbes 2000 conglomerate with over US$1 billion in sales in 2005. The mobile telephone market has expanded many-fold since 2003, reaching a subscriber base of 140 million users in July 2017, one of the highest mobile teledensities in the world.[94] Pakistan won the prestigious Government Leadership award of GSM Association in 2006.[95]

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

  1. Jazz Pakistan (parent: VEON, Netherlands)
  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, 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.[96]

Since liberalisation, over the past four years from 2003 to 2007, the Pakistani telecom sector has attracted more than $9 billion in foreign investments.[97] 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.

According to the PC World, 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.[98] Pakistan was amongst the top five rankers 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 were 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 the 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 the 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 46 million.[94]

After the successful implementation of the Device Identification Registration and Blocking System (DIRBS) in 2019 along with a comprehensive mobile manufacturing policy, it created a favourable environment for mobile device manufacturing in Pakistan. For the first time in the history of Pakistan, local mobile phone manufacturing exceeded the number of mobile phones that were imported in 2021. Mobile Device Manufacturing (MDM) licences have been issued to 26 companies, including Samsung, Nokia, Oppo, TECNO, Infinix, Vgotel, and Q-Mobile.[99]

PTA Reports[100][101]
Indicators 2003 2004 2005 2006 2007 2017 2018 2019 2020 2021 2022
Teledensity 4.31% 6.25% 11.9% 26.24% 44.06% 72.4% 74.1% 77.7% 79.9% 85.3% 89.5%
Cellular Mobile Subscribers (Millions) 2.4 5.0 12.7 34.5 62.3 139.8 151.5 162.3 168.6 184.2 194.6
Broadband Subscribers (Millions) 0.03 0.05 44.8 58.7 71.5 83.8 102.7 118.8
Broadband Penetration 0.0% 0.0% 22.7% 28.1% 33.8% 38.5% 46.9% 53.9%
Cellular Mobile Data Usage (Petabytes) 690 1,262 2,493 4,510 6,855 8,970
Telecom Revenues ( Billion PKR) 118 144 195 236 528 540 606 597 651 694
Telecom contribution to exchequer (Billion PKR) 30.0 38.0 67.1 77.1 100.0 160.9 162.8 115.5 291.9 225.8 325.2
Total Telecom investment ( Million US $ ) 1,473 1,731 4,109 1,133 1,132 840 1,394 1,336 2,073
Mobile (CBU) imports (Million units) 18.11 12.07 16.28 24.51 10.26 1.53
Local Assembly / Manufacturing (Million units) 1.72 5.2 11.74 13.05 24.66 21.94

Transportation

Air linkage
Jinnah International Airport in Karachi.

The year 1955 marked the inauguration of the Pakistan airline's first scheduled international service – to London, via Cairo and Rome. In 1959, the Government of Pakistan appointed Air Commodore Nur Khan as the managing director of PIA. With his visionary leadership, PIA ‘took off’ and within a short span of 6 years, gained the stature and status of one of the world's frontline carriers. In aviation circles, this period has often been referred to as the "golden years of PIA". On 29 April 1964, with a Boeing 720B, PIA earned the distinction of becoming the first airline from a non-communist country to fly into the People's Republic of China. 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.

PIA Annual Reports[102]
Indicators 2003 2008 2013 2018 2019 2020 2021 2022
Route Kilometers 290,129 311,131 411,936 332,303 389,725 705,820 374,054 341,821
Passengers carried (000) 4,556 5,617 4,449 5,203 5,290 2,541 2,657 4,281
Operating Revenue (Billion PKR) 47.952 88.863 95.771 103.490 147.500 94.989 86.185 172.038
Operating Expenses (Billion PKR) 42.574 120.499 123.151 150.524 153.631 95.670 101.212 183.354
Profit+/-Loss after Tax (Billion PKR) +1.298 -36.138 -44.322 -67.328 -52.602 -34.643 -50.101 -88.008
Railway Linkage
A Pakistan Railway train.

Pakistan Railways (PR) is a major mode of transport in the public sector, contributing to the country's economic growth and providing national integration. 13 May 1861 was a historical day when the first railway line was opened for public between Karachi City and Kotri, a distance of 169 km. In 1885, the Sindh, Punjab and Delhi Railways were purchased by the Secretary of State for India. On 1 January 1886 this line and other State Railways were integrated and North Western State Railway was formed; which was later on renamed as North Western Railways (NWR). At the time of Independence, the NWR was bifurcated with 1,847 route miles lying in India and 5,048 route miles in Pakistan. In 2022, Pakistan Railways comprised a total of 467 locomotives (462 Diesel Engine and 05 Steam Engines) for the 7,479 km route length. Pakistan Railways employs 60,643 people in the year 2022.

Pakistan Railway Year Books[103]
Indicators 2016 2017 2018 2019 2020 2021 2022
Route Kilometers 7,791 7,791 7,791 7,791 7,791 7,791 7,479
Track Kilometer 11,881 11,881 11,881 11,881 11,881 11,881 11,492
Passengers Carried (000) 52,192 52,388 54,907 60,387 44,304 28,424 35,681
Goods Carried (000 Tonnes) 5,001 5,630 8,355 8,376 7,412 8,213 8,098
Operating Revenue (Billion PKR) 36.582 40.065 49.570 54.508 47.584 48.649 60.257
Operating Expenses (Billion PKR) 41.858 50.072 52.071 53.772 59.288 56.333 67.562
Net Loss (Billion PKR) 26.532 40.793 37.123 33.491 50.271 47.707 48.325
Road Linkage
Karakoram highway.

The National Highway Authority (NHA) was established in 1991 through an Act of Parliament for the planning, development, operation, repair, and maintenance of National Highways and Strategic Roads specially entrusted to NHA by the Federal Government or by a Provincial Government or other authority concerned. NHA is the custodian of 39 national highways, motorways, expressways, and strategic routes, with a total length of 12,131 km, constituting 4.6% of the total national roads network, which is 263,775 km. However, it carries 80% of commercial traffic, and the N-5 National Highway, which is the lifeline of Pakistan, carries 65% of this load in the country.

Maritime Linkage
Port of Karachi.

Pakistan National Shipping Corporation (PNSC) is a national flag carrier. It was formed through the merger of the National Shipping Corporation (NSC) and Pakistan Shipping Corporation in 1979. PNSC has had worldwide operations in the Dry Bulk segment of the shipping market since its inception and has been involved in the transportation of liquid cargo since 1998, both locally and internationally. The corporation's head office is located in Karachi. Currently, the PNSC fleet comprises eleven vessels of various types and sizes (five Bulk carriers, four Aframax tankers, and two LR-1 Clean Product tankers) with a total deadweight capacity (cargo carrying capacity) of 831,711 metric tons, the highest ever carrying capacity since the inception of PNSC.[104]

Finance

Pakistan has a large and diverse banking system. In 1974, a nationalization programme led to the creation of six government-owned banks.[105] A privatization programme in the 1990s led to the entry of foreign-owned and local banks into the industry.[105] As of 2010, there were five publicly-owned commercial banks in Pakistan, as well as 25 domestic private banks, six multinational banks, and four specialised banks.[105]

A part of Downtown Karachi, Showing the MCB Tower and Habib Bank Plaza. The headquarters of many banks in Pakistan can be found here.

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 in 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.[106]

An article published in the Journal of the Asia Pacific Economy by Mete Feridun of the University of Greenwich in London with his Pakistani colleague Abdul Jalil presents strong econometric evidence that financial development fosters economic growth in Pakistan.[107]

Financial Statements of Major Banks 2021 (Billion PKR)[108][109]
Bank Total assets Revenue Profit After Tax
STATE BANK OF PAKISTAN 13,608.462 813.285 757.021
HABIB BANK LTD. 4,074.588 151.672 34.271
NATIONAL BANK OF PAKISTAN 3,846.684 134.559 28.008
UNITED BANK LTD. 2,618.166 95.138 30.882
MCB BANK LTD. 1,970.468 84.061 30.811
MEEZAN BANK LTD. 1,902.971 83.813 28.355
BANK AL-HABIB LTD. 1,849.652 69.636 18.702
ALLIED BANK LTD. 2,010.156 61.525 17.314
BANK ALFALAH LTD. 1,734.321 62.522 14.217
HABIB METROPOLITAN BANK LTD. 1,224.416 40.637 13.459
THE BANK OF PUNJAB 1,196.952 37.780 12.440

In recent years, banking through digital channels has been gaining popularity in the country. These channels offer alternatives resulting in faster delivery of financial services to a wide range of customers. Significant progress has been observed in the usage of Internet Banking and Mobile Banking channels during the last few years, which is evident from the fact that in the last 5 years, internet banking transactions have seen compound annualised growth of 31%, whereas mobile banking transactions have grown by 86% during the said period.

Payment System Infrastructure[110]
FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023
Number of Banks 45 45 45 44 44 44 44
Bank branches 14,293 14,970 15,598 16,067 16,308 17,031 17,693
Total Number of ATMs 12,689 14,019 14,722 15,612 16,355 17,133 17,808
Internet Banking Users (000) 2,347 3,114 3,279 3,983 5,239 8,370 9,637
Mobile Phone Banking Users (000) 2,484 3,386 5,626 8,452 10,873 12,339 16,061
POS Machines 54,490 53,511 56,911 49,067 71,907 104,865 115,288
Credit Cards (million) 1.29 1.45 1.59 1.66 1.72 1.80 2.01
Debit Cards (million) 17.9 21.7 24.8 26.7 29.8 30.2 33.9
Payment System Statistics[110]
FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023
PRISM System* Transactions (Millions) Increase1.1 Increase1.7 Increase2.5 Increase2.6 Increase4.2 Increase4.4 Increase4.9
Amount (Trillion PKR) Increase279.5 Increase361.0 Increase398.2 Decrease394.3 Increase444.6 Increase681.6 Decrease640.4
E-Banking Transactions (Millions) Increase626 Increase756 Increase870 Increase906 Increase1,183 Increase1,612 Increase2,073
Amount (Trillion PKR) Decrease37.1 Increase47.4 Increase58.8 Increase66.0 Increase86.5 Increase137.9 Increase167.4
Paper Based Transactions (Millions) Increase452 Increase467 Decrease465 Decrease425 Decrease396 Decrease392 Decrease374
Amount (Trillion PKR) Increase139.6 Increase150.4 Decrease145.9 Decrease131.2 Increase151.6 Increase190.4 Increase228.7
Total Transactions (Millions) Increase1,079 Increase1,224 Increase1,338 Decrease1,331 Increase1,583 Increase2,008 Increase2,452
Amount (Trillion PKR) Increase456.1 Increase558.8 Increase602.8 Decrease591.5 Increase682.7 Increase1,009.8 Increase1036.5

* Real-Time Gross Settlement (RTGS) mechanism in Pakistan is named the Pakistan Real-time Interbank Settlement Mechanism (PRISM).

Housing

House on mountains in Murree.

The property sector has expanded twenty-threefold since 2001, particularly in metropolises like Lahore.[111] 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.[112] To promote affordable housing and home ownership among low to middle-income group, who currently do not own a house, SBP in 2020 has introduced the Government's Mark-Up Subsidy Scheme through which subsidized financing is provided to individuals for construction or purchase of a new house. Since then, a huge demand for house financing has been witnessed by the commercial banks.

Outstanding Loans of Consumer Financing for House Building (Billion PKR)[53]
Jun 2006 Jun 2010 Jun 2015 Jun 2016 Jun 2017 Jun 2018 Jun 2019 Jun 2020 Jun 2021 Jun 2022 Jun 2023
43.205 54.500 40.207 48.153 60.688 82.939 92.561 79.803 103.631 200.765 212.315

Tourism

Tourism in Pakistan has been hailed as 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 that of a decade ago. Currently, Pakistan ranks 130th in the world by tourist income. Due to the threat of terrorism, the number of foreign tourists has gradually declined, and the shock of the 2013 Nanga Parbat tourist shooting has severely adversely affected the tourism industry.[113] As of 2016, tourism has begun to recover in Pakistan, albeit gradually, with a current global rank of 130.[114]

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.[115]

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.

The World Bank (WB) and International Finance Corporation's flagship report Ease of Doing Business Index 2020 ranked Pakistan 108 among 190 countries around the globe, indicating a continuous improvement and taking a jump from 136 last year. The top five countries were New Zealand, Singapore, Denmark, Hong Kong and South Korea.[116]

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 are considering entry into Pakistan auto market through joint ventures with local manufacturers like Dewan Farooque Motors, Khalid Mushtaq Motors and United Motors.[117] As of March 2022, only the Hyundai Nishat JV materialised.

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 offshore.[118]

To boost Pakistan's unstable foreign-exchange reserves, Qatar announced to invest $3 billion in the form of deposits and direct investments in the country.[119] By the end of June 2019, Qatar sent the first $500 million to Pakistan.[120][121]

Data is from SBP.[122][123]

Amounts are in million US$
List 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 FY 2021 FY 2022
Foreign Direct Investment Increase 5,410 Decrease 3,720 Decrease 2,151 Decrease 1,635 Decrease 821 Increase 1,457 Increase 1,699 Decrease 1,034 Increase 2,393 Increase 2,407 Increase 2,780 Decrease1,362 Increase2,598 Decrease1,821 Increase1,868

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.

The foreign exchange receipts from these sales are also helping cover the current account deficit.[127]

Foreign trade

Gwader port in Balochistan.

Pakistan witnessed the highest export of US$25.4 billion in the FY 2010–11. However, in subsequent years exports have declined considerably. This decline started from the 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 the 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.[128] World imports had been stagnant between 2011 and 2014 but registered a 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 a strong correlation between Pakistani exports to imports in OECD and China. As per FY 2016 data, more than half of the country's exports are shipped to these two destinations i.e. OECD and China. A decline in Pakistan's overall exports thus occurred in this backdrop.[129]

Note: This is the trade data (export and import) as released by the SBP.[130] This may differ from the data compiled by Pakistan Bureau of Statistics.

Amounts in billion US dollars
List 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 FY 2021 FY 2022 FY 2023
Total Exports Increase 24.01 Decrease 23.21 Increase 24.89 Increase 31.11 Decrease 29.73 Increase 31.53 Decrease 30.42 Decrease 29.96 Decrease 27.43 Increase 27.92 Increase 30.62 Decrease 30.22 Decrease 27.97 Increase 31.58 Increase 39.60 Decrease 35.21
Goods Increase 20.45 Decrease 19.13 Increase 19.68 Increase 25.37 Decrease 24.72 Increase 24.80 Increase 25.08 Decrease 24.09 Decrease 21.97 Increase 22.00 Increase 24.77 Decrease 24.26 Decrease 22.54 Increase 25.64 Increase 32.49 Decrease 27.91
Services Decrease 3.56 Increase 4.09 Increase 5.21 Increase 5.75 Decrease 5.01 Increase 6.72 Decrease 5.35 Increase 5.87 Decrease 5.46 Increase 5.92 Decrease 5.85 Increase 5.97 Decrease 5.44 Increase 5.95 Increase 7.10 Increase 7.30
Total Imports Increase 45.44 Decrease 39.22 Decrease 38.12 Increase 43.57 Increase 48.69 Decrease 48.45 Increase 49.66 Increase 50.21 Decrease 50.12 Increase 58.58 Increase 67.95 Decrease 62.81 Decrease 52.40 Increase 62.73 Increase 84.49 Decrease 60.01
Goods Increase 35.28 Decrease 31.67 Decrease 31.13 Increase 35.80 Increase 40.37 Decrease 40.16 Increase 41.67 Decrease 41.36 Decrease 41.12 Increase 48.00 Increase 55.67 Decrease 51.87 Decrease 43.65 Increase 54.27 Increase 71.54 Decrease 51.99
Services Increase 10.16 Decrease 7.56 Decrease 6.99 Increase 7.77 Increase 8.32 Decrease 8.29 Decrease 8.00 Increase 8.85 Increase 9.00 Increase 10.58 Increase 12.28 Decrease 10.94 Decrease 8.75 Decrease 8.46 Increase 12.94 Decrease 8.02
Trade deficit Negative increase 21.43 Positive decrease 16.01 Positive decrease 13.23 Positive decrease 12.46 Negative increase 18.96 Positive decrease 16.92 Negative increase 19.24 Negative increase 20.24 Negative increase 22.69 Negative increase 30.66 Negative increase 37.33 Positive decrease 32.58 Positive decrease 24.43 Negative increase 31.15 Negative increase 44.89 Positive decrease 24.80

Pakistan's imports are showing a rising trend at a relatively faster rate due to increased economic activity as part of the 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 US$24.8 billion, showing a growth of 12.6 percent over the previous year, FY 2017. Imports, on the other hand, also increased by 16.2 percent, reaching the highest figure of US$56.6 billion. As a result, the trade deficit widened to US$31.8 billion, which was the highest in the last ten years. Pakistan's exports of goods recorded their highest level of $25.6 billion during the fiscal year 2020–21, higher than the $25.3 billion recorded in 2010–11.

Exports

Pakistan's major export commodities since fiscal year 2014 are listed in the table below.[131][132]

Amounts are in Million US$
Commodities FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022
Knitwear 2,194 Increase 2,264 Increase 2,309 Increase 2,335 Increase 2,615 Increase 2,854 Decrease 2,688 Increase 3,372 Increase 4,516
Ready-made garments 1,834 Increase2,044 Increase2,156 Increase 2,279 Increase 2,477 Increase 2,568 Increase 2,595 Increase 2,820 Increase 3,698
Bed wear 2,062 Increase2,207 Decrease2,126 Increase 2,157 Increase 2,346 Increase 2,347 Decrease 2,230 Increase 2,691 Increase 3,255
Rice 2,108 Decrease2,038 Decrease1,853 Decrease 1,575 Increase 1,933 Increase 2,163 Increase 2,274 Decrease 2,211 Increase 2,760
Cotton cloth 2,734 Decrease2,487 Decrease2,332 Decrease 2,123 Increase 2,176 Decrease 2,174 Decrease 1,942 Decrease 1,884 Increase 2,338
Chemical and pharmaceutical 1,138 Increase1,250 Decrease1,052 Increase 1,113 Increase 1,390 Decrease 1,227 Decrease 1,074 Increase 1,147 Increase 1,482
Cotton yarn 2,053 Decrease1,818 Decrease1,266 Decrease 1,140 Increase 1,249 Decrease 1,202 Decrease 1,081 Decrease 921 Increase 1,200
Towels 756 Decrease716 Increase721 Decrease 679 Increase 750 Decrease 713 Decrease 680 Increase 882 Increase 1,080
Leather manufactures 524 Increase547 Decrease488 Decrease 487 Increase 615 Decrease 503 Decrease 480 Increase 560 Increase 649
Sports goods 587 Decrease585 Decrease539 Increase 552 Decrease 551 Decrease 519 Decrease 458 Increase 471 Increase 507
Surgical goods & medical instruments 378 Increase401 Increase424 Decrease 396 Increase 442 Decrease 438 Decrease 411 Increase 480 Decrease 475

Imports

Pakistan's major import commodities since fiscal year 2014 are listed in the table below.[133][134]

Amounts are in Million US$
Commodities FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022
Petroleum products 9,020 Decrease 7,774 Decrease 5,098 Increase 6,380 Increase 6,768 Decrease 6,039 Decrease 4,190 Increase 4,641 Increase 10,296
Petroleum crude 5,755 Decrease 4,393 2,570 Increase 2,765 Increase 4,310 Increase 4,915 Decrease 2,606 Increase 3,190