Economy of Pakistan

Pakistan has a developing mixed economy with a strong focus on agriculture. It is the 42nd-largest economy in the world by the value of all goods and services produced. However, because of its large population, its economic output per person ranks lower globally.

Historically, Pakistan relied on its private sector but went through periods of nationalization in the 1970s. It later adopted an Islamic economic system and began privatizing again in the 1990s. Today, the country depends heavily on agriculture and the textile industry for its exports. Pakistan has faced many economic challenges, including financial crises.

The Pakistani rupee has lost much of its value over time. Despite these challenges, Pakistan shares a strong trading relationship with China, its top import and export partner. The nation continues working to improve living standards for its people.

History

Main article: Economic history of Pakistan

In the late 1940s, when Pakistan was new, its economy was mostly based on farming. More than half of the country's money came from growing crops, and most people worked in agriculture. Pakistan had many natural resources but also faced big challenges, like not enough money and infrastructure.

A trading post in Kaghan Valley, Pakistan, 2021

In the 1950s, Pakistan started planning its development with special plans to help the country grow. The 1960s were a time of growth, especially in farming and making things, with help from other countries. However, wars and political changes affected the economy. The 1970s saw more changes after a part of the country became independent.

The 2000s were tough for Pakistan's economy, with ups and downs, including a big financial crisis in 2008. By 2025, Pakistan's economy had grown, helped by people working abroad sending money home and better management of money and resources.

Data

Gross domestic product (GDP)

The table below shows important economic numbers from 1980 to 2025.

Real GDP per capita growth was 1.5% in 2024.

Stock market

Main article: Pakistan Stock Exchange

Statue of a bull outside the Islamabad Stock Exchange, 2009

In the early 2000s, Pakistan's KSE 100 Index was named the best-performing stock market index in the world. In 2016, the three stock exchanges in Pakistan joined together to form a single Pakistan Stock Exchange.

Informal economy

The informal economy in Pakistan includes jobs and businesses that are not fully regulated or taxed. In 2023, the official economy was about US $340 billion, but the informal economy was estimated to be about US $457 billion.

Many people work in small factories, shops, building work, transport, home help jobs, and small businesses. This makes it hard for the government to tax and control.

People in Pakistan also save money by buying gold and jewellery, which are not always counted in official statistics.

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

Middle class

In 2017, some estimates suggested that about 42% of people in Pakistan might be part of the middle or upper classes. Official data shows that more families now own motorcycles and washing machines than before.

In 2022, spending on things like cars and houses grew a lot.

Poverty alleviation expenditures

The Pakistani government spent over 1 trillion rupees (about $16.7 billion) on programs to help poor people. This helped lower poverty from 35% in 2000–01 to 17% in 2015. However, poverty in villages is still a big problem because those areas develop more slowly than cities.

Clifton in Karachi, 2019

A report from the World Bank said that about 45% of people in Pakistan were living in poverty.

Employment

Government revenues and expenditures

Pakistan’s government gets most of its money from taxes collected by the Federal Board of Revenue. Taxes include things like income tax, sales tax, and customs duties. The government also gets money from state businesses and profits from the State Bank of Pakistan.

Currency

Main article: Pakistani rupee

The main money used in Pakistan is called the rupee. Its symbol is Rs, and it is split into 100 smaller parts called paisas. The largest bill you can find is worth 5,000 rupees. Over the years, new designs for the bills have been made to make them harder to copy.

The value of the rupee used to be tied to another country's money, the pound sterling, until 1982. After that, its value changed more freely, which made it worth less compared to other currencies. This change affected many businesses that bought goods from other places.

Major sectors

Agriculture, fishing, forestry and livestock

Main articles: Agriculture in Pakistan, Fishing industry in Pakistan, Animal husbandry in Pakistan, and Forestry in Pakistan

Most people in Pakistan work in farming, fishing, forestry, and raising animals. This part of the economy makes up about 23% of the country's total money (GDP) and gives jobs to about 37% of workers. It is also the biggest source of money coming into the country from other places. The most important crops are wheat, sugarcane, cotton, and rice. Wheat is the biggest food crop in Pakistan. In 2018/19, Pakistan sold a lot of rice to other countries.

Industry

Main article: Industry of Pakistan

Industry makes up about 19% of Pakistan's GDP. The government is changing big factories from being owned by the government to private owners. Big factories are growing faster than smaller ones. The government wants to help different types of factories grow and sell more around the world. Important industries include textiles, fertiliser, cement, oil refineries, dairy products, food processing, beverages, construction materials, clothing, paper products, and shrimp.

Manufacturing

Manufacturing is the biggest part of industry, making up about 12% of GDP. It has three parts: big factories, small factories, and slaughtering. Important manufacturing includes cement, fertiliser, edible oil, sugar, steel, tobacco, chemicals, machinery, food processing, and medical tools, especially surgical ones. Pakistan makes and sells a lot of surgical instruments.

Pakistan's biggest companies work in oil, gas, electricity, cars, cement, food, chemicals, fertiliser, aviation, textiles, and telecommunications.

Automobile

Main article: Automotive industry in Pakistan

Yellow and green fields in Punjab

The car industry helps a lot with the country's industry. With government help, the industry is growing. New companies are starting, and old ones are investing more. Companies like Proton, MG, and Volkswagen are getting ready to start making cars. KIA, Hyundai, Changan, and Prince DFSK have already started making cars in Pakistan.

Defence

Main article: Defence industry of Pakistan

The defence industry started in 1951 to make military tools and machines. It works on projects like tanks, planes, drones, and ships. Pakistan sells weapons to over 40 countries. Pakistan gets a lot of its weapons from China and the USA.

Most textile work happens in Punjab. The industry has big factories and small home-based workshops. Big factories have many machines for spinning thread and weaving cloth. Small workshops make clothes, towels, and other textile products. Some companies have grown very big and work internationally.

As of June 2021, Pakistan had many textile factories. The spinning part has grown because of demand from other countries and because Pakistan grows a lot of cotton. This has helped the weaving and processing parts grow too. Some factories now use special air-jet weaving machines.

Mining

Factory in Pakistan

Main article: Mining in Pakistan

Pakistan has many useful minerals and is becoming a good place to find and dig up these minerals. After a change in the rules in 2018, each area of Pakistan can dig up and use the minerals there. Digging up minerals and quarrying adds to the country's GDP.

Energy

Main article: Energy policy of Pakistan

Pakistan gets its energy from gas, oil, coal, liquefied natural gas (LNG), and hydroelectricity. Gas used to be the biggest part but has gone down. Coal and LNG have become more important. Pakistan plans to make more nuclear power by 2030.

Services

Pakistan's service sector makes up about 61.7% of the GDP. This includes transport, storage, communications, finance, and insurance. Wholesale and retail trade makes up about 30%. Pakistan is trying to grow the information industry and other new modern service industries by giving special help like long-term tax holidays.

Education

Main article: Education in Pakistan

Finance

Main articles: Banking in Pakistan and Insurance in Pakistan

Cars on Shahrah-e-Faisal in Karachi

Pakistan has many banks. In 1974, the government took over six banks. In the 1990s, the government let private and foreign banks start working there. By 2010, there were five government banks, 25 private banks from Pakistan, six from other countries, and four special banks.

Healthcare

Main article: Healthcare in Pakistan

Housing and real estate

Main articles: Real estate in Pakistan and Housing in Pakistan

Retail and hospitality

Main pages: Saddar Bazaar, Landa bazaar, Meena Bazaar, American Market, , List of shopping malls in Pakistan, List of hotels in Pakistan, E-commerce in Pakistan, Pakistani food streets, Category:Retailing in Pakistan, and Category:Pakistani brands

Telecommunications

Main article: Telecommunications in Pakistan

After letting companies compete, the telecommunications industry has grown a lot. Pakistan Telecommunication Company Ltd (PTCL) is a big company with over US$1 billion in sales. The mobile phone market grew fast since 2003 and now has many users. Pakistan got an award from the GSM Association in 2006.

Information technology

Main article: Information technology in Pakistan

Tourism

Main article: Tourism in Pakistan

Tourism in Pakistan has brought many tourists to the country. Pakistan is 130th in the world for how much money tourists bring. Because of safety worries, fewer foreign tourists visit, but tourism is starting to grow again.

Transportation

Main article: Transportation in Pakistan

Ground linkage

Rail linkage

Air linkage

In 1955, Pakistan started its first international flight to London. In 1959, Air Commodore Nur Khan became the leader of PIA. Under his guidance, PIA became one of the best airlines in the world. Private airlines in Pakistan include Airblue, which flies to cities in Pakistan and to places in the Persian Gulf and Manchester in the United Kingdom.

Maritime linkage

Foreign trade

Main articles: Foreign trade of Pakistan and List of tariffs in Pakistan

Investment

Foreign investment in Pakistan fell a lot by 2010 because of political problems and safety issues.

Economic aid

Main article: Foreign aid to Pakistan

Pakistan receives help from many places, in the form of loans and gifts. The International Monetary Fund (IMF), World Bank (WB), and the Asian Development Bank (ADB) give long-term loans to Pakistan. Pakistan also gets help from richer countries and oil-rich nations. This help is very important for Pakistan's money.

Remittances

Money sent home by Pakistanis living in other countries has been very important for Pakistan's economy. People from Pakistan living in Western Europe and North America send a lot of money home. Since 1973, workers from Pakistan in oil-rich Arab countries have sent billions of dollars home.

Remittances sent home by overseas Pakistanis in the fiscal year 2021 are as follows:

Country	(billion US$)
Saudi Arabia	7.667
UAE	6.114
UK	4.067
Gulf Cooperation Council	3.310
USA	2.754
European Union	2.709
Australia	0.594
Canada	0.586
Malaysia	0.204
Norway	0.111
Japan	0.085
Switzerland	0.041
Other countries	1.130

Economic issues

Taxation

In 2023, some big groups like real estate, manufacturing, and energy did not pay as much tax as they should. This cost the government a lot of money — about 4.61 percent of the country’s total money.

Corruption

Main article: Corruption in Pakistan

Pakistan has had problems with corruption for a long time. Leaders and police have been accused of not doing enough to stop it. Pakistan often ranks low on lists that measure how honest a government is. This hurts the economy because powerful groups sometimes change rules to help themselves. This wastes money that could help everyone.

Military interference

The military in Pakistan has a big say in how the country’s money is used. For example, in 2025, a top military leader met with money experts to talk about the value of Pakistan’s currency. Usually, these decisions are made by civilian leaders, but the military often gets involved in economic matters.

Poverty and Income inequality

Main articles: Poverty in Pakistan and Standard of living in Pakistan

For many years, a few wealthy families have controlled much of Pakistan’s money and businesses. Even today, the richest people earn much more than the poorest. The top 1 percent of earners take home a large share of the country’s income, while the bottom 20 percent get only a small part.

Debt

Main articles: National debt of Pakistan, Foreign aid to Pakistan, and Periods of stagflation in Pakistan

Pakistan owes a lot of money to international organizations. In 2017, this debt was a big part of the country’s total economy. Paying this debt back, along with the interest, is a major challenge for the government.