Pakistan is South Asia's second largest
economy after India. Since the nation's inception in
1947, the economy has mainly been based on three
pillars: agriculture, textile industry and remittances
(money that Pakistani workers abroad send home). The
Pakistani economy has been described as "growth without
Pakistan has had long periods of good economic
growth, but it has not benefited the residents in the
form of increased wealth to the extent that one would
expect. The gap between a small rich elite and the large
poor majority is deep.
Major imports by Pakistan, covering a full list of top products imported by the country and trade value for each product category.
Governments' inability to collect enough tax (less
than one percent of the population pays tax) and the
large appropriations to the military have created
constant budget deficits. Much of the assistance the
country has received over the years has gone to the
military, not least the US support.
A indebted country
Both government and foreign debt are large
(especially the debt to China) and the payments devolve
huge sums each year. Foreign exchange reserves are
small; in autumn 2018 they were reported to be able to
pay imports for two months. A payment crisis was
threatened and the government went to Saudi Arabia and
China for help, as well as to the IMF. In October,
Pakistan received a $ 12 billion aid package from the
Saudis in the form of debt relief, loans and deferral of
oil import payments. Two months later, the central bank
received a billion dollars in support from the Saudis.
Abbreviationfinder.org: Check this abbreviation website to find three letter ISO codes for all countries in the world, including PAK which represents the country of Pakistan.
In April 2019, Pakistan agreed with the IMF on a $ 8
billion rescue package to reduce the $ 15 billion gap in
the Pakistani state budget. The package concerned, among
other things, energy prices, tax intakes and exchange
rates. A month later, a series of tax exemptions worth $
2.5 billion was abolished each year. At the same time,
prices for electricity and gas were raised.
Qatar and the United Arab Emirates also provided
financial support to the Pakistani government that year.
In addition to seeking outside help, Pakistan also
sought to reduce imports, devalue the currency several
times to make exports cheaper, and offer benefits to
those working abroad to increase remittances.
There are also political reasons for the economic
problems. Many shifts between civilian and military
governments, often in violent forms, have hampered the
emergence of a stable state administration and
frightened investors. Regional contradictions have
hampered development projects, including irrigation
facilities, and hampered trade. Decades of political
violence in the port and industrial city of Karachi have
also slowed development. Nationalizations during the
1970s and a rigid and corrupt bureaucracy that emerged
during the military regimes are other causes.
The inclusion on the US side of the "war on terror"
from 2001 brought a financial boost as Washington shed
debts and increased its assistance to cover Pakistan's
increased military costs. The IMF in turn approved
financial aid packages, renegotiated old loans and
granted new credits. One caveat to the support was that
Pakistan implemented comprehensive reforms. For example,
a number of state-owned companies and banks were
privatized in the early 2000s, giving the Treasury major
contributions. But all in all, the "war on terror" has
entailed huge costs. In 2016, the central bank stated
that it had so far cost the country just over $ 118
billion, which corresponded to more than a third of the
country's GDP that year.
Many young people without a job
Pakistan's economic base is quite narrow. More than
40 percent of the population is dependent on agriculture
for their livelihoods, and the industry is largely
focused on textiles.
An important challenge for the power holders is also
to be able to create jobs for all the young people who
might otherwise be tempted to join extremist movements.
Many travel abroad to work. The redundancies in 2017 had
more than quadrupled in ten years. The size of the black
economy is estimated to correspond to about half of the
Previously high inflation has been subdued in recent
years. Direct investment from abroad has declined since
a peak around 2007/2008. The largest investments come
from China, followed by the United States, the United
Kingdom and the United Arab Emirates. In recent years,
Chinese investments have been made within the framework
of the China-Pakistan Economic Corridor (CPEC)
The country is drawn with chronic deficits in the
trade and balance of payments with abroad. The main
reason is the large oil import. The deficit in the
balance of payments is generally covered by referrals
and assistance and credits.
FACTS - FINANCE
GDP per person
US $ 1,473 (2018)
US $ 312 570 M (2018)
5.4 percent (2018)
Agriculture's share of GDP
22.6 percent (2018)
Manufacturing industry's share of GDP
12.1 percent (2018)
The service sector's share of GDP
53.5 percent (2018)
7.3 percent (2019)
Government debt's share of GDP
71.7 percent (2018)
US $ 84,523 million (2017)
US $ 24,827 million (2018)
US $ 57,435 million (2018)
- US $ 19,191 million (2018)
Commodity trade's share of GDP
27 percent (2018)
Main export goods
textiles (bedding, towels, clothing, cotton fabrics,
cotton yarn), basmati rice, leather and leather goods,
Largest trading partner
Exports: USA, UK, China, Afghanistan, Germany.
Imports: China, United Arab Emirates, USA, Indonesia
UN personnel are taken home
The UN calls home some of its staff for security reasons.
New army offensive begins
The military launches an offensive against the Taliban in South Waziristan.
The army is deploying 30,000 men to the districts controlled by new Taliban
leader Hakimullah Mehsud. Already after four days, 100,000 civilians are
reported to have moved.
Taliban revenge, war state
Taliban attack UN Food Program office in Islamabad and kill six relief
workers in revenge for Baitullah Mehsud's death. During the autumn, there are so
many terrorist attacks that the government describes it as being in a state of
Taliban leader killed
Taliban leader Baitullah Mehsud, his wife and several bodyguards are killed
in an American rocket attack against their house in the clan area of South
"The offensive in Swat Valley is over"
Authorities say that the offensive in Swat Valley is over and that the
Taliban there are basically harmless. Refugees begin to return to the area.
Army offensive in Swat Valley
The army puts 15,000 men in a counter-offensive against the Taliban in Swat
Valley. Hard fighting erupts and about 1.5 million people panic. The world's
worst refugee crisis is emerging.
Armistice with Taliban
Pakistan enters a ceasefire with Taliban who have taken control of the Swat
Valley in the northwestern border province. Shortly thereafter, contrary to what
they promised, the Taliban move into neighboring districts and begin moving
Government: "Pakistanis Perform Mumbai Mumbai"
Pakistan admits that the coordinated terrorist attacks in Mumbai in November
2008 were carried out by Pakistanis.