Pakistan has seen economic growth of almost five percent per year between 2015 and 2017. Gross domestic product (GDP) in 2017 was US $ 305 billion (USD), while GDP per capita in the same year was US $ 5,400.
Pakistan faces major economic challenges. The scope of foreign investment is small, partly due to weak political stability, a failing energy supply and a high security risk for personnel and installations. The absence of economic reforms and weak tax revenues also generally contribute to low public budgets.
For generations, Pakistan’s economy has been based on agriculture, which despite a more diverse economic structure in the country, still accounts for about one-fifth of the country’s national budget and employs about one-third of the working population. The industry accounts for well over a quarter of the national product, and employs close to 20 percent of people in work. A rich supply of water from the Himalayas provides the basis for hydropower- based energy, and in addition to large power plants, smaller local power plants have been developed in recent years – especially in the north. Baluchistan has viable deposits of natural gas, while oil is extracted in Sindh, among others.
Between 1965 and 1980, Pakistan had an average economic growth of 5 percent annually, and during the 1980s it remained at around 6 percent. In the period 1990–2003, there was an average GDP growth of 3.9 percent. Following transient negative growth at the turn of the millennium, growth was very strong in the following years, reaching 8.4 percent in 2004-2005, according to estimates from the International Monetary Fund (IMF). Despite this, almost 30 percent of the population lives in poverty (2013). This is partly due to the large population growth and partly to the fact that the country’s wealth is in relatively few hands. Very many feed on a single farm.
In the early 1970s, the authorities nationalized large parts of the country’s industrial enterprises. Later, and especially from the mid-1980s, it was again opened to privatization. In the 1990s, Nawaz Sharif’s two governments implemented rapid privatization of state-owned industrial enterprises. Almost all restrictions on capital movements, banking establishments and private investments were lifted. However, economic growth was hampered by weak resource use, widespread corruption and a highly inefficient tax system.
During the 1990s, poverty became even more widespread, with infrastructure and social services characterized by decay. Pervez Musharraf’s military-dominated regime has continued with radical economic reforms since the turn of the millennium; including the tax system. A comprehensive poverty reduction program was implemented in the years 2001–2004. The economy has been increasingly open to foreign investors since the turn of the millennium.
The material damage after an earthquake disaster on October 8, 2005, was estimated by the World Bank at USD 5 billion. From the world community, a total of USD 6 billion in aid was subsequently promised.
Tourism is relatively modest. Political turmoil and competition from more easily accessible neighboring countries keep tourist visits at a fairly low level. In the first years after the turn of the millennium, the country was visited by about half a million foreign tourists annually.
Mining and energy
Mining is mainly state-controlled. More than 3 million tonnes of coal are extracted (in Baluchistan and Punjab) annually. However, the coal has low quality. Large deposits of coal have recently been discovered in the Thar Desert in Sind. Chromium ore (northeastern Baluchistan), limestone, petroleum, plaster and iron ore are also extracted. Natural gas production covers a large part of Pakistan’s energy consumption. From the large field at Sui (near Sukkur) in Baluchistan, a 560 kilometer long pipeline leads to Karachi and a 350-kilometer long cord to Multan in Punjab. However, gas installations have been subject to sabotage by militant Baluchi nationalists, especially since 2005.
In 2016, the consumption of primary energy was 4 exajoules (EJ), of which 28 percent was based on imports. Oil and natural gas are the dominant energy sources with a share of around 80 percent. Oil is imported from the Middle East, especially Saudi Arabia, while some natural gas comes from Iran.
The final consumption of electrical energy was 109 TWh in 2016. The per capita figure corresponds to around 500 kWh, but not all are connected to the electricity grid. In 1981, only about 15 percent of the villages had access to electricity, but after Pakistan has invested heavily in the development of the electricity grid in recent years, now (2017) a quarter of the population is without electricity.
The main source of energy for the production of electrical energy is fossil fuel, mainly in the form of oil and natural gas, to a lesser extent coal. Of a total production of 123 TWh in 2016, 66 percent came from thermal power plants. Other power generation was distributed among hydropower plants (26 percent), nuclear power plants (6 per cent) and wind power plants (2 percent).
Pakistan, originally with the help of France, was early in the process of deploying nuclear technology, but has later faced adversity since they did not sign the non-proliferation agreement.
Agriculture, forestry and fishing
Agriculture is the dominant trade route. In 2015, the industry (including forestry and fishing) employed more than 42 percent of the working population and in 2016 contributed 19 percent of GDP. About 25 percent of the country’s total land is cultivated land, of which about 80 percent is dependent on artificial irrigation. From the Indus and its bees runs a fine mesh of irrigation channels; of its kind, the world’s largest continuous system. The large use of artificial irrigation has resulted in increased salt content in the soil, and neglect of the water sources in some places.
Since the 1960s, there has been an emphasis on increased mechanization, greater use of artificial fertilizers and the use of better seed grain to increase agricultural productivity. Agriculture is mostly run by small landlords/ tenants; 90 percent is under 10 hectares, and the area yield is still relatively low. The great landlords have held to a considerable extent their position as feudal lords; also with great political influence. Adopted land reforms have largely become paper products. Horses, oxen and donkeys still play an important role as a driving force in agriculture and as a means of transport.
The most important cultural growth is wheat (19 million tonnes, 2003), rice and sugar for domestic consumption. The country is self-sufficient with these goods. Cotton and leather products are very important export goods. Cotton has traditionally accounted for about half of the export revenue. Wheat, corn and sugar cane are also important selling products. Otherwise, fruits and dates (Baluchistan), millet, oilseeds, beans, tobacco and more are also grown. Animal husbandry is important in areas without irrigation.
Just under 5 percent of the country’s area is productive forest. Most of the timber is used for house building and fuel.
The fishing industry is important, and has seen strong growth in recent years. Since the turn of the millennium, the annual catch volume has been in excess of 600,000 tonnes. 90 percent of the catch is taken in the sea, especially along the Makran coast (Baluchistan) and along the coast between Karachi and the border with India. Pakistan has a small domestic market for fish; 40 percent of the catches are ground to fishmeal and used as animal feed, otherwise most are exported, especially shrimp to Japan and Singapore. Freshwater fishing has very little and only local significance.
The industry (including mining) employs 22.6 percent of the working population (2015) and contributes 19.1 percent of GDP (2016). The industry is growing, and in the period 1990–2002 had an annual growth rate of 4 percent. In 2017, the growth rate was 5.4 percent. The largest industrial expansion has taken place in Punjab, where new businessmen have become a new upper class in competition with traditional landlords. The textile and food industry, together with the refining of petroleum, are the most important industries. The cotton industry, with its center of gravity in Karachi, largely produces textiles and yarns for export.
Pakistan Steel operates a large steel plant outside Karachi, at Port Bin Qasim. The work was originally established with Soviet support, and is based on imported ore and scrap iron. The country is self-sufficient with paper. The leather goods industry is growing rapidly after Pakistan has begun to process the leather to a greater extent rather than exporting unprocessed hides and skins. The food, rubber and machinery industries and the chemical and electrical engineering industries are also expanding. A large part of the production is consumables such as refrigerators, fans, light bulbs, radio and television sets. The pharmaceutical industry is largely dominated by multinational companies. There is also an artisanal industrial production, especially of ceramics and rugs.
Pakistan has a significant trade deficit and receives loans and financial assistance from a number of countries and the World Bank. Contributions from Pakistani workers abroad make up a large part of the country’s foreign exchange income.
- COUNTRYAAH: Find major trading partners of Pakistan, including major exports and major imports with latest trade value and market share as well as growth rate.
The transfers showed a declining trend in the 1990s, and were at their lowest with about one billion USD at the turn of the millennium. Subsequently, transfers increased sharply, to approximately $ 4 billion in 2003 and 2004.
The main export goods are various cotton goods ($ 6.6 million in 2003) and leather goods (4.8 million). In 2003/2004, oil and petroleum products accounted for 21 per cent of total imports. Other imports include in particular machinery and transport equipment, chemicals, iron and steel products, and semi-finished products for industry. The most important export markets as of 2017 are the United States (17.7 percent), the United Kingdom (7.7 percent) and China (6 percent), while the country imports most from China (27.4 percent), the United Arab Emirates (13.7 percent) and United States (4.9 percent).
Transport and Communications
The transport network in Pakistan is of a very varied nature, and is best developed in the north and in a belt down to Karachi on the coast. Karachi is the country’s most important port city. A new deepwater port was opened in 2005 in Gwadar. There are 11,881 kilometers of railway (2019). A railway connection to Turkmenistan via Afghanistan is underway. Over half of the 263,775 kilometers of road network are paved (2019). In 1978, Karakorum Highway opened, a road link connecting Xinjiang Province in China. From 1997 there is a highway between Lahore and Islamabad.
- According to AllCityPopulation, the capital city of Pakistan is Islamabad with a population of 1,014,800 (2017). Other major cities include Karachi (14,900,000), Lahore (11,100,000), Faisalabad (3,200,000), Rawalpindi (2,100,000) (2017).
In Karachi, the city’s own urban train network (‘urban train’) was reopened in 2005 after extensive modernization since 1998. The city has over 15,000 city buses; all privately owned. Motor rickshaws, three-wheeled scooters with roofs and doors and imaginative decorations, make their mark on the traffic in many cities. Tongas, two-wheeled horse carts, are still in use. International airports can be found at Karachi, Rawalpindi/Islamabad, Lahore, Peshawar and Quetta. Four private airlines compete with the 50 percent state-owned Pakistan International Airlines (PIA) and Shaheen Airlines, operated by the Air Force. PIA has had direct routes from Gardermoen to Islamabad and Lahore since 1999.