Pakistan was a middle class and predominantly agricultural country when it gainedin 1947 as a result of partition of India by the departing British. Pakistan’s average economic growth rate in the first five decades (19471997) has been higher than the growth rate of the world economy during the same period. Average annual real GDP growth rateswere 6.8% in the 1960s, 4.8% in the 1970s, and 6.5% in the 1980s. Average annual growth fell to 4.6% in the 1990s with significantly lower growth in the second half of that decade.
In 2016, the Atlantic Media Company (AMC) of the United States has ranked Pakistan as a relatively stronger economy in the South Asian markets and expected that it will grow rapidly during days ahead. AMC said that during the period JanuaryJuly this year, Indian 100 point index was 6.67% while Karachi Stock Exchange (KSE) had achieved 100 point index of 17 percent.
Pakistan’s economy in the period 2008-2012 been characterised as unstable and highly vulnerable to external and internal. However, the economy proved to be unexpectedly resilient in the face of multiple adverse events concentrated into a four-year (19982002) period
According to many sources, the Pakistani government has made substantial economic reforms since 2000,and medium-term prospects for job creation and poverty reduction are the best in nearly a decade.
In 2005, thereported that
The World Bank (WB) and‘s flagship report2020 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,,,and.
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 in Pakistan auto market through joint ventures with local manufacturers like Dewan Farooque Motors, Khalid Mushtaq Motors and United Motors.
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 at offshore.
To boost Pakistan’s unstable foreign-exchange reserves, Qatar announced to invest $3 billion the form of deposits and direct investments in the country.By the end of June 2019, Qatar sent the first $500 million to Pakistan.
In the first four years of the twenty-first century, Pakistan’swas the best-performingin the world as declared by the international magazine “Business Week”.The stock market capitalisation of listed companies in Pakistan was valued at $5,937 million in 2005 by the.But in 2008, after the General Elections, uncertain political environment, rising militancy along western borders of the country, and mounting inflation and current account deficits resulted in the steep decline of the. As a result, theof Pakistan has declined dramatically in recent times. However, the market bounced back strongly in 2009 and the trend continues in 2011. By 2014 the stock market burst into uncharted territories as the benchmarkrose 907 points (3.1%) and shot past the 30,000-point barrier to close at a new record high, this came days after Moody’s announced that it was upgrading the outlook of 5 major Pakistani banks from Negative to Stable, resulting in heavy buying in the banking sector. The rally was supported by heavy buying in the oil and gas and cement sectors.On 11 January 2016, aimed to help reduce market fragmentation and create a strong case for attracting strategic partnerships necessary for providing technological expertise all the three stock exchanges including Karachi Stock Exchange, Lahore Stock Exchange and Islamabad Stock Exchange were inducted into a unified.In May 2017 American provider of stock market indexes and analysis tools,has confirmed that the(PSX) has been reclassified from Frontier Markets to Emerging Markets in its semi-annual index review.Euphoria over the stock exchange’s reclassification as an emerging market propelled the PSE-100 Index past another milestone when the Index recorded an increase of 636.96 points, or 1.23%, to end at 52,387.87.In the fiscal year 2018, the stock market showed a negative growth of 7.1% over the last fiscal year and stood at 47000 points at average.Pakistan’s stock market’s performance has been remarkable in FY2021. During July 2020 to April 2021 period, the benchmark KSE-100 index improved from 34,889.41 points to 44262.35 points. Pakistan Stock exchange also successfully powered through 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 KSE-100 index continued to climb throughout the year. The increase in the KSE-100 Index was driven by government’s large stimulus package, central bank’s stable policy rate, an uptick in large scale manufacturing, improvement in external accounts and reforms introduced by the(SECP) and PSX in the wake of.
PSX 100 index growth rate
|PSX 100 index growth%||34.1||37.9||-10.8||-41.7||35.7||28.5||10.4||52.2||41.2||16.0||9.8||23.2||-10.0||-20.5||1.5||29.5|
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.Official figures also show that the proportion of households that own a motorcycle and washing machines has grown impressively over the past 15 years.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 posted an increase of Rs37.6 billion during first half of the current fiscal year of 2017. Auto finance continued to be the dominated segment, while personal loans showed a pickup as well. “The net credit off-take of Rs13.7 billion of personal loans witnessed in first half of the fiscal year 2017 is the highest half-year figure in about a decade,” the report stated.
Pakistan government spent over 1 trillion rupees (about $16.7 billion) on poverty alleviation programmes during the past four years, cutting poverty from 35% in 200001 to 29.3% in 2013 and 17% in 2015.Rural poverty remains a pressing issue, as development there has been far slower than in the major urban areas.
The high population growth in the past few decades has ensured that a very large number of young people are now entering the labor market. Even though it is among the six most populous Asian nations. In the past, excessive red tape made firing from jobs, and consequently hiring, difficult.Significant progress in taxation and business reforms has ensured that many firms now are not compelled to operate in the underground economy.
“In 2016 government took a remarkable initiative by announcing the Prime Minister’s Youth Program to combat unemployment in the country. This program has a broad canvas of schemes enabling youth and poor segment of society to get better employment opportunities, economic empowerment, acquiring skills needed for gainful employment, access to IT and imparting on-the-job training for young graduates to improve the probability of getting a productive job. Prime Minister’s Youth Program includes six schemes which are Prime Minister’s Youth Business Loan Scheme, Prime Minister’s Interest Free Loan Scheme, Prime Minister’s Youth Skill Development Program, Prime Minister’s Program for Provision of Laptops to Talented Students, Prime Minister’s Fee Reimbursement Scheme,Prime Minister’s Youth Training Scheme”.Government sector is also contributing in employment and according to estimate 4.5 million people are employed by federal, provincial and local governments in different sectors from Armed forces to education and health.
has been stated as being the tourism industry’s “next big thing”., with its diverse cultures, people and landscapes, has attracted 90 million tourists to the country, almost double to that of a decade ago. Currently, Pakistan ranks 130th in the world by tourist income. Due to threat of terrorism the number of foreigner tourists has gradually declined and the shock ofhas terribly adversely effected the tourism industry.As of 2016tourism has begun to recover in Pakistan, albeit gradually.
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, collects almost 86% of the entire national tax collection.
Data is taken from Ministry of Finance.
|List||FY 2005||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|
|As% of GDP|
The basic unit of currency is the, ISO code PKR and abbreviated Rs, which is divided into 100 paisas. Currently the newly printed 5,000 rupee note is the largest denomination in circulation. Recently the SBP has introduced all new design notes of Rs. 10, 20, 50, 100, 500, 1000 and 5000.
The Pakistani rupee was pegged to theuntil 1982, when the government of, changed it to. As a result, the rupee devalued by 38.5% between 1982/83 many of the industries built by his predecessor suffered with a huge surge in import costs. After years of appreciation underand despite huge increases in foreign aid the rupee depreciated.
The Pakistani rupee depreciated against the US dollar until around the start of the 21st century, when Pakistan’s large current-account surplus pushed the value of the rupee up versus the dollar. Pakistan’s central bank then stabilised by lowering interest rates and buying dollars, in order to preserve the country’s export competitiveness.
Pakistan maintains foreign reserves with. The currency of the reserves was solely US dollar incurring speculated losses after the dollar prices fell during 2005, forcing the then Governor SBPto step down. In the same year the SBP issued an official statement proclaiming diversification of reserves in currencies including Euro and Yen, withholding ratio of diversification.
Following the international credit crisis and spikes in crude oil prices, Pakistan’s economy could not withstand the pressure and on 11 October 2008, State Bank of Pakistan reported that the country’s foreign exchange reserves had gone down by $571.9 million to $7749.7 million.The foreign exchange reserves had declined more by $10 billion to a level of $6.59 billion. In June 2013 Pakistan was on the brink of default on its financial commitments. Country’s Forex reserves were at an historic low covering only two weeks’ worth of imports. In January 2020, Pakistan’s Foreign exchange reserves stood at US$11.503 billion.
|List||Jun 2005||Jun 2006||Jun 2007||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|
|Net reserves with SBP||9804.7||10765.2||13345.4||8577.0||9117.9||12958.2||14783.6||10803.3||6008.4||9097.5||13525.7||18142.6||16144.8||9765.2||7285.2||12132.0||17297.6|
|Net reserves with banks||2792.9||2357.2||2301.8||2821.7||3307.3||3792.2||3460.2||4485.4||5011.1||5043.6||5173.5||4955.9||5258.1||6618.4||7196.4||6754.4||7099.0|
Agriculture accounted for about 53% of GDP in 1947. While per-capita agricultural output has grown since then, it has been outpaced by the growth of the non-agricultural sectors, and the share of agriculture has dropped to roughly one-fifth of Pakistan’s economy. In recent years, the country has seen rapid growth in industries (such as apparel, textiles, and cement) and services (such as telecommunications, transportation, advertising, and finance).
|Sectors||FY 2000||FY 2005||FY 2010||FY 2015||FY 2020||FY 2021|
Majority of the population, directly or indirectly, dependent on this sector. It contributes about 19.2% percent of gross domestic product (GDP) and accounts for 37.4% of employed labor force in 2021 and is the largest source of foreign exchange earnings.The most important crops are wheat,, cotton, and rice, which together account for more than 75% of the value of total crop output. Pakistan’s largest food crop is wheat. In 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.In the previous market year of 2018/19 Pakistan exported a record 4.5 million tonnes of rice as compared to around 4 MMT during the corresponding period last year.
Pakistan is a net food exporter, except in occasional years when its harvest is adversely affected by droughts. Pakistan exports rice, cotton, fish, fruits (especially Oranges and Mangoes), and vegetables and imports vegetable oil, wheat, pulses and consumer foods.The 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 oil seed production, play a central role in the government’s economic reform package.
Data is from Ministry of Finance and.
|List||FY 2004||FY 2005||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|
|Production of Important Crops (Million Tonnes)|
* cotton production in million bales.
Pakistan’s principal natural resources areand 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.is the largest financial institution geared towards the development of agriculture sector through provision of financial services and technical expertise.
During 201718, agriculture sector recorded a remarkable growth of 4.00 percent and surpassed its targeted growth of 3.5 percent and last year’s growth of 2.18 percent. All the major crops showed a positive trend in their production except maize.Sugarcane and rice production surpassed their historic level with 83.3 and 7.5 million tons respectively.provisionally valued this sector at Rs. 11,542,998 million for the year 2021 thus registering the growth of 20.1% over the last year.Again in 201819, Agriculture sector did not hit its target growth and only grew by 0.56%. Major crops except maize fell below their previous year output. The agriculture sector’s performance during 2020-21 broadly stands encouraging as it grows by 2.77 percent against the target of 2.8 percent. The production of major Kharif crops 2020, such as sugarcane, maize and rice indicated considerable improvement compared to last year and surpassed the production targets. The production of sugarcane increased by 22.0 percent to 81.009 million tonnes from 66.380 million tonnes, rice by 13.6 percent to 8.419 million tonnes from 7.414 million tonnes and maize by 7.4 percent to 8.465 million tonnes from 7.883 million tonnes. However, the cotton crop suffered mainly due to decline in area sown, heavy monsoon rains and pest attacks. The cotton production reduced by 22.8 percent, to 7.064 million bales from 9.148 million bales last year.
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 6,00,000km2of outcrops area demonstrates varied geological potential for metallic and non-metallic mineral deposits. In the wake of 18th amendment to the constitution all the provinces are free to exploit and explore the mineral resources which are in their jurisdiction. Mining and quarrying contributes 13.19% in industrial sector and its share in GDP is 2.4%.
In the recent past, exploration by government agencies as well as by multinational mining companies presents ample evidence of the occurrences of sizeable minerals deposits. Recent discoveries of a thick oxidised zone underlain by sulphide zones in the shield area of the Punjab province, covered by thick alluvial cover have opened new vistas for metallic minerals exploration. Pakistan has a large base for industrial minerals. The discovery of coal deposits having over 175 billion 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 6 fiscal years is given in the table below:-
|Minerals||Unit of quantity||20142015||20152016||20162017||20172018||20182019||2019-2020|
Pakistan’ssector accounts for approximately 19.12% of GDP.In 2021 it recorded a growth of 3.57% as compared to the growth of negative 3.77% in 2020.Manufacturing is the largest of Pakistan’s industrial sectors, accounting for approximately 12.13% of GDP.Manufacturing sub-sector is further divided in three components including large-scale manufacturing (LSM) with the share of 79.6% percent in manufacturing sector, small scale manufacturing share is 13.8 percent in manufacturing sector, while slaughtering contributes 6.5 percent in the manufacturing.Major sectors in industries include,,,,,,,,and medical instruments, primarily surgical.Pakistan is one of the largest manufacturers and exporters of.
|Manufactured Goods||Unit of quantity||2017||2018||2019||2020||2021|
|Cotton Cloth||Million Meters||1,043||1,044||1,046||935||1,048|
|Paper & Board||Tons||669,000||731,000||704,000||707,000||730,000|
|Cycle Tyres & Tubes||Thousand||11,507||11,470||14,491||13,496||10,314|
|Motor Tyres & Tubes||Thousand||34,345||35,057||36,321||35,678||31,906|
|Trucks / Buses||Numbers||7,712||9,187||6,035||2,945||3,808|
The government is privatizing large-scale industrial units, and the public sector accounts for a shrinking proportion of industrial output, while growth in overall industrial output (including the private sector) has accelerated. Government policies aim to diversify the country’s industrial base and bolster export industries. Large Scale Manufacturing is the fastest-growing sector in Pakistani economy.Major Industries include,, cement,,, food processing,,,, paper products and.
In Pakistanhave a significant contribution in the total GDP of Pakistan, according toand Economic survey reports, the share in the annual GDP is 40% likewise SMEs generating significant employment opportunities for skilled workers and entrepreneurs. Small and medium scale firms represent nearly 90% of all the enterprises in Pakistan and employ 80% of the non-agricultural labor force. These figures indicate the potential and further growth in this sector.
Data is from Pakistan Bureau of Statistics.