Economic trends
The GDP's growth rate remained positive despite the international economic crisis, thanks to the positive results of the agricultural sector. In recent years, the government made significant macro-economic reforms, which include the privatization of state-subsidized services, the institution of an anti-money laundering law, an increase in the harshness of punishment against the piracy of intellectual property and quick settlements for the disputes between investors. In the context of the fight against terrorism, the country has received substantial financial aid from the United States, an important factor for growth and economic stability. However, when this payments reached their end in October 2008, Pakistan asked aid from the IMF and adopted a stabilization plan which has obtained limited results. Despite a slight improvement, the country remains confronted with several difficulties: economic slowdown, budgetary deficit and insufficient growth of tax receipts. The major threats to Pakistan's economy are: international high prices in oil barrels, inflation, raw materials prices, a deficit on the balance of payments and political insecurity and uncertainty.
Since 2011, economic activity has not been sufficient to meet the challenges facing the Pakistani society. Growth has been declining (2.6% in 2011), the deficit reached 3.4% of the GDP and inflation reached 15%. The decrease in industrial production only testifies to the lack of investment and the chronic shortage of energy supply. The unemployment rate is estimated at about 7.5% and the level of underemployment is very high. Life expectancy is only 64 years and less than 55% of the population is literate. Moreover, the increasing poverty (22.3% of the population living below the poverty line) is the direct result of these economic difficulties and of problems of governance. Extreme poverty and underdevelopment are major problems, especially in rural areas. Lastly, the country's public debt stood at around 66.4% of GDP the end of 2011, up 17% compared to the previous year.
The perspectives of growth for 2012 are expected to be low due to the strong floods that again devastated the country in 2011. Thousands of agricultural workers lost their jobs and the cost of reconstruction is estimated at billions of US dollars. The country's economic situation therefore remains fragile and uncertian.
Main branches of industry
The agricultural sector is the main pillar of the Pakistani economy. It contributes around 21.8% to the GDP and employs approximately 42% of the active population. Wheat, rice, cotton, sugarcane, fruits, vegetables and tobacco are the chief crops. Cattle livestock farming is also very important. Pakistan is the 4th largest cotton producer in the world and has abundant natural resources, mainly copper, oil and gas.
The industrial sector contributes up to 23.6% to the GDP. The major industries are textile production (the largest source of foreign exchange revenue), oil refining, metal processing, and the production of cement and fertilizers. Maritime transport is also a significant activity.
The tertiary sector contributes to around half of the GDP. Money transfers from Pakistanis working abroad create a considerable godsend financial income for the country.
International trade
Despite its economic and political difficulties, Pakistan has taken steps to liberalize its trade and investments in the context of commitments made with the WTO, IMF, and the World Bank. The share of foreign trade in the country’s GDP is around 35%. The drop in global demand during 2008-9 resulted in a high trade deficit.
Pakistan's three main customers are the United States (more than 27%), the United Arab Emirates (7%) and Afghanistan (6.5%). The main export commodities are cotton, textiles, clothing and cereals.
Its three main import partners are Saudi Arabia (more than 11% of imports), the United Arab Emirates (11%) and China (11%). Pakistan mainly imports fuels, oil, vehicles, iron and steel.
60 years after the establishment of diplomatic relations between the two countries, Pakistan and China continue to share the same strategic issue: how to counterbalance the Indian hegemony in Southern Asia. In addition to military cooperation, trade and investment also play a role and China's place as Pakistan's trading partner is becoming gradually more important.
Turkey, Saudi Arabia, Iran and the Golf countries are also among the country's largest trading partners.
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Last updates: May 2012
