Economy of Pakistan

In the late 1940s, when Pakistan came into existence in 1947, its economy was primarily agrarian. Agriculture contributed 53% of the country's GDP in 1947 and a slightly higher 53.2% in 1949-50. During this period, Pakistan had a population of around 30 million, with approximately 6 million living in urban areas. Remarkably, about 65% of the labor force was engaged in agriculture, and the agricultural sector played a pivotal role, contributing to 99.2% of exports and accounting for nearly 90% of foreign exchange earnings.

Despite Pakistan's considerable wealth in terms of land and mineral resources in both East and West Pakistan, including valuable resources like natural gas, crude oil, coal, limestone, and marble, the nation grappled with a multitude of challenges. Its per capita income stood at roughly $360 (in 1985 international dollars) in 1950, and the literacy rate was a mere 10%. Pakistan faced a dearth of economic infrastructure, financial resources, and an industrial foundation. The West Pakistan region, in particular, experienced poverty rates ranging from 55% to 60%.

Given the scarcity of capital in Pakistan's relatively small private sector, the government turned to the public sector as a means to foster the development of the economic and industrial base. In the fiscal year 1949-50, Pakistan recorded a national savings rate of 2%, a foreign savings rate of 2%, and an investment rate of 4%. Manufacturing contributed 7.8% to the country's GDP, while the services, trade, and other sectors accounted for a substantial 39%, reflecting a policy centered around import-substituting industrialization. The trade balance of payments revealed a deficit of 66 million Rupees (Rs) during the period spanning 1949/50 to 1950/51.[42]

The 1950s marked the beginning of planned development in Pakistan. Following the launch of the Colombo Plan in 1951, Pakistan initiated a series of Five-Year Plans that spanned from 1955 to 1998. Alongside these plans, a Ten-Year Perspective Plan was introduced, complemented by a rolling Three-Year Development Plan.

During the 1950s, Pakistan adhered to a policy of import-substituting industrialization. Notably, during the Korean War (1950-1953), Pakistan's public and emerging private sectors benefited from substantial merchant profits. These profits were channeled into industrial capital, fueling the country's industrialization process.

In 1952, Pakistan imposed bans on the imports of cotton textiles and luxury goods, followed by comprehensive import regulations in 1953. Consequently, Pakistan joined the ranks of the fastest-growing nations during this period. However, biases against agriculture in policy and unfavorable terms of trade between agriculture and industry resulted in a decline in the annual growth rate of agriculture, dropping from 2.6% in 1949/50-1950/51 to 1.9% in 1957/58-1958/59.

By the late 1950s, Pakistan had achieved self-sufficiency in cotton textiles, and export development assumed significant importance. This coincided with an influx of US military and economic aid amounting to US$500 million during 1955-58, leading Pakistan into a phase of growth reliant on foreign aid in the 1950s.

In 1959, following a military coup d'état in 1958, the martial law regime introduced export bonus vouchers, which functioned as import licenses. Additionally, a list of goods was declared exempt from import licenses. During this period, Pakistan experienced a deterioration in its trade balance, with deficits increasing from -831 million Rupees in 1950/51 to -1043 million Rupees in 1959/60, primarily due to a sharp decline in exports from 1,038 million Rupees in 1950/51 to 763 million Rupees in 1959/60.

Economically, agriculture grew at an annual rate of 1.6%, while manufacturing expanded at an impressive rate of 7.7% per annum during the 1950s. In the fiscal year 1959-60, the Per Capita Gross National Product (GNP) stood at Rs. 355 in West Pakistan and Rs. 269 in East Pakistan, illustrating a growing economic disparity between the two regions.[42]

Amidst a substantial influx of American aid, Pakistan experienced political stability that facilitated robust economic growth throughout the 1960s. During this period, the prevalence of poverty, expressed as the poverty headcount ratio as a percentage of the population, ranged from nearly 50% in the early 1960s to 54% in 1963-64.

In the 1960s, Pakistan achieved an impressive agricultural growth rate of 5% annually. This was made possible through substantial investments in water resources, increased incentives for farmers, mechanization of agricultural production processes, greater utilization of fertilizers and pesticides, and expanded cultivation of high-yielding varieties of rice and wheat being part of the green revolution.

Additionally, large-scale manufacturing experienced significant growth, expanding at a remarkable rate of 16% per annum during the period spanning 1960/61 to 1964/65. This growth was driven by protective measures for domestic industries, including subsidies for exporters.

However, the Pakistan-India War of 1965 resulted in reduced foreign economic assistance, which had repercussions on the growth rate of large-scale manufacturing. During the subsequent period of 1965-70, this sector grew at a comparatively lower rate of 10% per annum.

Despite these challenges, Pakistan achieved an impressive average annual GDP growth rate of 6.7% throughout the decade from 1960 to 1970. In the fiscal year 1969-70, the poverty incidence rate decreased to 46%. At that time, the Per Capita GNP was Rs. 504 in West Pakistan and Rs. 314 in East Pakistan, indicating a widening regional economic disparity as observed previously.[42]

The economic landscape in the early 1970s was marked by growing economic disparities between East Pakistan and West Pakistan, which eventually led to East Pakistan's declaration of independence and its emergence as the independent nation of Bangladesh in 1971. In the aftermath, Pakistan saw significant changes in its political and economic landscape.

The martial law authorities, amidst challenging macroeconomic conditions, empowered the socialist Pakistan People's Party. This period was marked by several economic challenges, including a rise in poverty incidence to 55% during 1971-72. Additionally, Pakistan faced increased import costs due to the global oil price shock in October 1973, a severe global recession from 1974 to 1977, crop failures in the cotton sector in 1974-75, pest infestations affecting crops, and massive floods in 1973, 1974, and 1976-77.

One of the notable economic issues during this period was high inflation, with prices increasing by an average of 15% per annum between 1972 and 1977. The fiscal deficit/GDP ratio averaged 8.1% during the years 1973-77, reflecting significant fiscal challenges. Trade imbalances were also evident, with trade deficits amounting to US$337 million in 1970-71 and soaring to US$1,184 million in 1976-77.

The military coup d'état of 1977, leading to the establishment of a martial law regime that implemented denationalization, deregulation, and privatization policies. Agriculture saw modest growth at a rate of 2.4% per annum, while large-scale manufacturing expanded at a rate of 5.5% per annum during the 1970s.

A significant share of value-added and investment in manufacturing during the 1970s was contributed by large and medium-scale private manufacturing, accounting for 75% of the total. The remaining 25% of value-added came from small-scale manufacturing.

Lahore the second largest city of Pakistan.

Overall, this period was characterized by significant political and economic changes, driven by the challenges posed by economic disparities, political shifts, and efforts to address economic issues such as inflation, fiscal deficits, and trade imbalances.[42]

The 1980s brought significant changes to Pakistan's economic landscape, marking a departure from the nationalization policies of the 1970s and ushering in a revival of private sector industrial investment, which contributed to robust economic growth. During this decade, several notable developments occurred:

1. Poverty Reduction: Poverty incidence declined, with the poverty headcount ratio dropping to 29.1% in 1986-87.
2. Unemployment Rate: The unemployment rate exhibited a favorable trend, decreasing from 3.7% in 1980 to 2.6% in 1990.
3. Islamic Interest-Free Banking: Between 1985 and 1988, the government made efforts to implement an Islamic interest-free banking system. This system introduced Islamic business partnerships, where entrepreneurs and capital owners shared profits and losses, adhering to Islamic financial principles.
4. National Savings: Pakistan achieved a notable national savings/GDP ratio of 16% in 1986-87, mainly attributed to substantial inflows of worker remittances from the Middle East.
5. Fiscal Challenges: Despite the growth in national savings, Pakistan faced challenges related to negative public savings and a declining public investment/GDP ratio throughout the 1980s. These fiscal difficulties stemmed from the rapid growth in the public sector's non-development expenditures and a declining tax revenue/GDP ratio.
6. Budget Deficits: To cover the increasing budget deficits in the early 1980s, the government relied heavily on non-bank domestic borrowing. This led to substantial growth in domestic debt, which surged from Rs. 58 billion in mid-1981 to Rs. 521 billion in 1988.
7. Public Debt: As a consequence of the domestic debt explosion, the public debt/GDP ratio reached 77.1% in 1988, 81.9% in 1989, and 82.6% in 1990. This elevated level of public debt resulted in significant interest payments, increased public expenditure, and persistent fiscal deficits.
8. Democracy Restoration: In 1985, democracy was restored in Pakistan, marking a significant political development during this period.
9. Economic Growth: Pakistan experienced a commendable average annual GDP growth rate of 6.3% between 1980 and 1990.
10. Manufacturing and Agricultural Growth: The 1980s saw a surge in manufacturing exports, with an annual large-scale manufacturing growth rate of 8.8%. Additionally, agriculture exhibited solid growth, with an annual agricultural growth rate of 5.4%.

Islamabad the capital of Pakistan.

These hallmarks of the 1980s highlight a period of economic transformation and recovery, marked by a shift in economic policies, improved fiscal performance, and notable progress in poverty reduction and employment. The era was also characterized by efforts to align financial practices with Islamic principles and significant economic growth in the manufacturing and agricultural sectors.[42]

The 1990s presented Pakistan with several economic challenges and developments, including:

1. Remittances and External Deficits: Pakistan faced declining worker remittances and rising external deficits during this decade.
2. Inflation: The 1990s witnessed the second-worst inflation in Pakistan's history, attributed to declining GDP growth rates.
3. Unemployment: The unemployment rate sharply increased, reaching 5.9% in 1991 and further rising to 7.2% in 2000.
4. External Debt: By 1995, Pakistan's external debt amounted to US$30 billion, marking a tripling of external debt during the 1980-1995 period.
5. Debt Ratios: The external debt/GDP ratio increased from 42% to 50% during 1980-1995, while the external debt/exports ratio increased from 209% to 258%. The debt service ratio also rose significantly from 18% to 27%.
6. Domestic Debt: Due to a deteriorating external debt profile, Pakistan's domestic debt rose to Rs. 909 billion, and the domestic debt/GDP ratio reached 42%.
7. Debt Crisis: A severe debt crisis emerged in the late 1990s, with the public debt/GDP ratio soaring from 57.5% in 1975-77 to 102% in 1998-99. The public debt/revenues ratio also surged to 624%, and the interest payments/revenues ratio reached 42.6%. Pakistan's public debt became unsustainable during this period.
8. Risk of Default: The likelihood of external debt default became a concern in 1996 and 1998, primarily due to Western economic sanctions imposed in response to Pakistan's nuclear tests in May 1998. These sanctions triggered massive capital flight.
9. Economic Performance: Despite these challenges, Pakistan managed to maintain an agricultural growth rate of 4.4% per annum and a large-scale manufacturing growth rate of 4.8% per annum throughout the 1990s.
10. Poverty Incidence: Poverty incidence increased significantly, reaching 30.6% in 1998-99.

The 1990s were marked by a complex economic landscape, with Pakistan grappling with external debt, fiscal imbalances, inflation, and rising unemployment. Despite these difficulties, there were positive aspects such as growth in key sectors like agriculture and manufacturing. However, the decade also witnessed a significant increase in poverty incidence and the looming threat of debt default due to Western sanctions.[42]

In the 2000s, Pakistan faced a series of economic challenges and transformations, including:

1. High Public Debt Impact: In 2001, the official Debt Reduction and Management Committee identified high public debt as a significant factor contributing to a decline in the growth rate to less than 4% per annum.
2. Macroeconomic Crises: The 2000s saw a continuation of macroeconomic crises, despite an initial improvement in the growth rate. In 2004-05, Pakistan achieved a growth rate of 8.6%, but subsequent years were marked by a growth slowdown, low growth, high inflation, an energy crisis, and deteriorating fiscal and balance of payments positions.
3. Poverty Incidence: Poverty incidence increased to 34.5% in 2000-01, highlighting the challenges faced by the population. However, there was a subsequent decrease to 22.3% in 2005-06.
4. Unemployment Rate: The unemployment rate rose to 7.8% in 2002 but later declined to 5% by 2008.
5. Adult Literacy: Adult literacy stood at 55% in 2007-08, reflecting efforts to improve education and literacy rates.
6. Economic Crises: Pakistan experienced economic crises in 2008, with the prime effect of the global financial crisis in 2009-10.
7. Economic Growth: In 2009-2010, the inflation-adjusted growth rate reached a respectable 4.1%. The agricultural sector achieved a growth rate of 2%, the industrial output grew at 4.9%, large-scale manufacturing grew at 4.4%, and the services sector expanded at a rate of 4.6%.
8. Public Debt: By March 2010, the total public debt amounted to Rs. 8,160 billion, with a total public debt/GDP ratio of 56%. The foreign-currency denominated debt/GDP ratio was 25%.
9. Structural Transition: Pakistan underwent a significant structural transition during this period. The GDP share of agriculture declined from 53% in 1947 to 21.2% in 2010, while the GDP share of industry rose from 9.6% in 1949-50 to 25.4% in 2010. Additionally, the GDP share of the services sector increased from 37.2% in 1950 to 53.4% in 2010.[42]

The following table shows the main economic indicators from 1980 to 2022. Inflation below 5% is in green.[4]

Year	GDP (Billion US $ PPP)	GDP per capita (US$ PPP)	GDP (Billion US $ nominal)	GDP per capita (US$ nominal)	GDP growth (Real)	Inflation rate (Percent)	Unemployment (Percent)	Government debt (% of GDP)
1980	79.0	950.0	34.8	418.9	7.3%	11.9%	n/a	n/a
1981	91.8	1,072.8	41.2	481.3	6.4%	11.9%	n/a	n/a
1982	104.9	1,190.0	45.0	511.0	7.6%	5.9%	n/a	n/a
1983	116.4	1,283.6	42.0	463.7	6.8%	6.4%	3.9%	n/a
1984	125.4	1,345.3	45.6	489.8	4.0%	6.1%	3.8%	n/a
1985	140.6	1,468.4	45.6	476.7	8.7%	5.6%	3.7%	n/a
1986	152.5	1,551.3	46.7	475.3	6.4%	3.5%	3.3%	n/a
1987	165.4	1,638.5	48.8	483.9	5.8%	4.7%	3.1%	n/a
1988	182.2	1,759.4	56.3	543.1	6.4%	8.8%	3.1%	n/a
1989	198.5	1,868.3	58.7	552.0	4.8%	7.9%	3.1%	n/a
1990	215.4	1,970.1	58.9	538.4	4.6%	9.1%	3.1%	n/a
1991	234.1	2,094.8	66.9	598.4	5.4%	12.6%	5.9%	n/a
1992	257.5	2,211.1	71.5	614.2	7.6%	4.8%	5.9%	n/a
1993	269.2	2,252.4	75.7	633.6	2.1%	9.8%	4.7%	n/a
1994	286.9	2,341.1	76.3	622.8	4.4%	11.3%	4.8%	64.8%
1995	307.8	2,449.6	89.2	709.9	5.1%	13.0%	5.4%	58.0%
1996	334.1	2,594.8	93.1	723.5	6.6%	10.8%	5.4%	58.2%
1997	345.6	2,620.8	91.8	696.4	1.7%	12.8%	6.1%	58.5%
1998	361.7	2,678.9	91.4	677.0	3.5%	6.8%	5.9%	59.5%
1999	382.2	2,765.6	86.6	626.5	4.2%	5.7%	5.9%	67.2%
2000	406.1	2,855.1	89.7	630.3	3.9%	3.6%	7.8%	68.4%
2001	423.4	2,916.7	87.4	602.0	3.7%	4.4%	7.8%	72.2%
2002	443.4	2,995.0	87.9	593.9	2.4%	3.5%	8.3%	67.6%
2003	473.5	3,119.8	101.1	666.1	5.6%	3.1%	8.3%	62.7%
2004	522.6	3,376.5	118.8	767.8	7.7%	4.6%	7.7%	56.3%
2005	587.3	3,722.9	132.8	842.0	7.5%	9.3%	7.7%	52.3%
2006	640.6	3,986.8	154.5	961.4	5.6%	7.9%	6.2%	48.4%
2007	694.4	4,244.6	171.5	1,048.4	5.5%	7.8%	5.2%	47.1%
2008	743.0	4,362.9	191.4	1,124.0	5.0%	12.0%	5.2%	51.9%
2009	750.5	4,314.4	189.0	1,186.5	0.4%	19.6%	5.5%	52.8%
2010	779.1	4,386.4	199.4	1,122.7	2.6%	10.1%	6.0%	54.5%
2011	824.1	4,545.1	240.4	1,325.8	3.6%	13.7%	6.0%	52.8%
2012	847.1	4,577.9	252.5	1,364.8	3.8%	11.0%	6.0%	56.7%
2013	883.4	4,679.4	260.3	1,378.6	3.7%	7.4%	6.0%	57.9%
2014	931.7	4,838.4	275.1	1,428.4	4.1%	8.6%	6.0%	57.1%
2015	981.6	4,998.5	304.5	1,550.5	4.1%	4.5%	5.9%	57.0%
2016	1,010.7	5,048.9	313.6	1,566.6	4.6%	2.9%	5.9%	60.8%
2017	1,058.5	5,159.0	339.2	1,653.4	4.6%	4.1%	5.8%	60.9%
2018	1,150.0	5,482.7	356.2	1,698.0	6.1%	3.9%	5.8%	64.8%
2019	1,207.1	5,642.1	321.1	1,500.7	3.1%	6.7%	6.9%	77.5%
2020	1,211.4	5,550.6	300.4	1,376.5	-0.9%	10.7%	6.6%	79.6%
2021	1,338.8	6,014.7	348.5	1,565.6	5.8%	8.9%	6.3%	73.5%
2022	1,520.0	6,695.3	374.7	1650.3	6.1%	12.1%	6.2%	76.2%
2023	1,568.4	6,773.5	340.6	1,471.1	-0.5	29.2%	8.5%	76.6%

Statue of a bull outside Islamabad Stock Exchange.

In the first four years of the twenty-first century, Pakistan's KSE 100 Index was the best-performing stock market index in the world as declared by the international magazine "Business Week".[43] The stock market capitalisation of listed companies in Pakistan was valued at $5,937 million in 2005 by the World Bank.[44] 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 Pakistan Stock Exchange.[45] In May 2017 American provider of stock market indexes and analysis tools, MSCI has confirmed that the Pakistan Stock Exchange (PSX) has been reclassified from Frontier Markets to Emerging Markets in its semi-annual index review.[46] 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 PSE-100 index continued to climb throughout the year. Nearly 40 percent growth in the PSE-100 Index in FY 2021 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 Security and Exchange Commission of Pakistan (SECP) and PSX in the wake of COVID-19.[47]

PSX 100 index growth rate[48]

List	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	FY 2022
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	-19.1	1.5	37.6	-12.3

The sales of all companies (non-financial) surged to Rs 9,521 billion in the fiscal year 2021, posted a substantial increase of Rs 1,465 billion when compare to a decline of Rs 807 billion in preceding year. EBIT (earnings before interest and tax) recorded an increase of Rs 433 billion (53.21 percent YoY growth) during FY21, as the General, administrative & other expense witnessed relatively smaller rise in the same period. The interest expenses dropped to Rs 224 billion in FY21 from Rs 299 billion in FY20, resulted into a massive YoY increase of Rs 514 billion in profit before taxation. Besides, profit after tax of all companies rose by Rs 404 billion, posted a YoY growth of 125.06 percent during FY21 over FY20. Net profit margin of all companies jumped up to 7.64 in FY21 from 4.01 in FY20, primarily because of exceptional improvement in private sector companies’ net profit margin. Return on assets (ROA), and return on equity (ROE) of all companies rose to 6.37 percent and 17.93 percent in FY21 as compare to 3.10 percent and 8.91 percent in the preceding year. Private sector companies were the prime contributors in the improvement of ROA and ROE, the public sector companies contributed marginally. The key statistics of all public and private companies (non-financial) listed at Pakistan Stock Exchange have been given in the following table;[49]

Financial Analysis of Companies (Non-Financial) (Billion Rupees)

List	2016	2017	2018	2019	2020	2021
Total Assets	6,781	7,672	8,845	10,131	10,712	12,143
Total Liabilities	4,024	4,646	5,598	6,628	6,955	7,780
Shareholders' Equity	2,757	3,025	3,247	3,503	3,756	4,363
Total Sales	5,504	6,405	7,702	8,863	8,056	9,521
Profit Before Tax	498	606	613	612	482	996
Profit After Tax	361	435	431	412	323	728
%
Net Profit Margin	6.55	6.79	5.59	4.65	4.01	7.64
Return on Assets	0.84	0.89	0.93	0.93	0.77	0.83
Return on Equity	13.77	15.03	13.76	12.20	8.91	17.93
earnings per share	3.91	4.49	4.47	4.17	3.18	6.87

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

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.[50] Official figures also show that the proportion of households that own a motorcycle and washing machines has grown impressively over the past 15 years.[51] 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 recorded at Rs. 179 billion during the FY 2022. Auto finance continued to be the dominated segment, followed by House building which showed remarkable growth after the Mera Pakistan Mera Ghar scheme which was initiated by State Bank of Pakistan in December 2020. Under the scheme, 100 billion rupees have been disbursed by the banks until June 30, 2022. Total amount approved by banks reached to Rs. 236 billion while requested amount crossed half a tillion rupees.[50][52]

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 2000–01 to 29.3% in 2013 and 17% in 2015.[53] 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.[54] Significant progress in taxation and business reforms has ensured that many firms now are not compelled to operate in the underground economy.[55]

Clifton in Karachi.

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 Federal Board of Revenue, collects more than 80% of the entire national tax collection. Pakistan's fiscal landscape is characterized by a dynamic interplay between revenues and expenditures, shaping the nation's economic trajectory. The government's revenue streams primarily stem from two sources: taxation and non-tax revenue. Taxation, which includes income tax, sales tax, and customs duties, constitutes a substantial portion of revenues, bolstering both federal and provincial government finances. Non-tax revenue sources, such as mark-up from state enterprises, surplus profits from the State Bank of Pakistan, and royalties on oil and gas, further contribute significantly to the fiscal framework.

Conversely, government expenditures are strategically allocated across multiple sectors, including defense, social services, infrastructure development, and debt servicing. Current expenditures, covering operational costs, interest payments, pensions, and other obligations, are carefully balanced against development expenditures aimed at fostering long-term growth and progress. The challenge of achieving equilibrium between revenue generation and expenditure allocation leads to budgetary deficits that can necessitate borrowing to bridge the gap.

Data is taken from Ministry of Finance.[56]

Consolidated Federal and Provincial Fiscal Operations (Amounts in billion PKR)

List	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	FY 2022	FY 2023
Total Revenue	1,499	1,851	2,078	2,253	2,567	2,982	3,637	3,931	4,447	4,937	5,228	4,901	6,272	6,903	8,035	9,634
Tax Revenue	1,065	1,317	1,473	1,699	2,053	2,199	2,565	3,018	3,660	3,969	4,467	4,473	4,748	5,272	6,755	7,819
FBR Taxes	1,008	1,161	1,327	1,558	1,883	1,946	2,255	2,590	3,113	3,368	3,842	3,830	3,998	4,764	6,143	7,169
Total Expenditure	2,277	2,531	3,007	3,447	3,936	4,816	5,026	5,388	5,796	6,801	7,488	8,346	9,649	10,307	13,295	16,155
Fiscal Deficit	777	680	929	1,194	1,370	1,834	1,389	1,457	1,349	1,864	2,260	3,445	3,376	3,403	5,260	6,521
As % of GDP
Total Revenue	14.1	14.0	14.0	12.3	12.8	13.3	14.5	14.3	13.6	13.9	13.3	11.2	13.2	12.4	12.0	11.4
Tax Revenue	9.9	9.1	9.9	9.3	10.2	9.8	10.2	11.0	10.4	10.4	10.8	9.7	9.3	9.4	10.1	9.2
Total Expenditure	21.4	19.2	20.2	18.9	21.4	21.5	20.0	19.6	17.7	19.1	19.1	19.1	20.3	18.5	19.9	19.1
Fiscal Deficit	7.3	5.2	6.2	6.5	8.8	8.2	5.5	5.3	4.1	5.2	5.8	7.9	7.1	6.1	7.9	7.7

Pakistani Rupee banknotes.

The basic unit of currency is the rupee, ISO code PKR and abbreviated Rs, which is divided into 100 paisas. Currently, 5,000 rupee note is the largest denomination in circulation. From 13 August 2005, the SBP started introducing its fifth generation design of banknotes with additional security features, with the Rs. 20 note being the first issuance. New designs of Rs. 5 (July 2008, later replaced by a coin) 10 (May 2006), Rs. 20 (March 2008, new color scheme), Rs. 50 (July 2008), Rs. 100 (November 2006), Rs. 500 (January 2010), Rs. 1000 (February 2007) and Rs. 5000 (May 2006) were gradually introduced.[57][58][59]

The Pakistani rupee was pegged to the pound sterling until 1982, when the government of General Zia-ul-Haq, changed it to a managed float regime. 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 under Zulfikar Ali Bhutto and 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 State Bank of Pakistan. The currency of the reserves was solely US dollar incurring speculated losses after the dollar prices fell during 2005, forcing the then Governor SBP Ishrat Hussain to 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.[61] 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. The country's forex reserves were at a historic low covering only two weeks' worth of imports. In January 2020, Pakistan's Foreign exchange reserves stood at US$11.503 billion.[62]

Amounts in Billion US dollars[63][64]

List	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	Jun 2022	Jun 2023
Total Reserves	11.4	12.4	16.8	18.2	15.3	11.0	14.1	18.7	23.1	21.4	16.4	14.5	18.9	24.4	15.5	9.2
SBP Reserves	8.6	9.1	13.0	14.8	10.8	6.0	9.1	13.5	18.1	16.1	9.8	7.3	12.1	17.3	9.9	4.5
Banks Reserves	2.8	3.3	3.8	3.5	4.5	5.0	5.0	5.2	5.0	5.3	6.6	7.2	6.8	7.1	5.6	4.7

Yellow and green fields in Punjab.

Majority of the population, directly or indirectly, dependent on this sector. It contributes about 23.0% 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.[66] The most important crops are wheat, sugarcane, 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 FAOSTAT.[67] 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 in the previous year.[68]

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.[69] 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.

% growth[48][70][71]

List	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	FY 2022
Agriculture sector	0.81	3.41	0.31	2.71	3.23	3.14	2.42	1.78	0.41	2.22	3.88	0.94	3.91	3.52	4.27
Production of Important Crops (Million Tonnes)
Wheat	20.9	24.0	23.3	25.2	23.5	24.2	26.0	25.1	25.6	26.7	25.1	24.3	25.2	27.5	26.4
Rice	5.6	6.9	6.9	4.8	6.2	5.6	6.8	7.0	6.8	6.8	7.5	7.2	7.4	8.4	9.3
Sugarcane	63.9	50.0	49.4	55.3	58.4	63.8	67.5	62.8	65.5	75.5	83.3	67.2	66.4	81.0	88.7
Cotton *	11.7	11.8	12.9	11.5	13.6	13.0	12.8	14.0	9.9	10.7	11.9	9.9	9.1	7.1	8.3
Maize	3.6	3.6	3.3	3.7	4.3	4.2	5.0	4.9	5.3	6.1	5.9	6.8	7.9	8.9	9.5

* cotton production in million bales.

Pakistan's principal natural resources are arable land and 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. Zarai Taraqiati Bank Limited is the largest financial institution geared towards the development of agriculture sector through provision of financial services and technical expertise.

Factory in Pakistan.

Pakistan's industrial sector accounts for approximately 19.12% of GDP.[65] In 2021 it recorded a growth of 7.81% as compared to the growth of negative 5.75% in 2020.[70] 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.[72] Major Industries include textiles, fertiliser, cement, oil refineries, dairy products, food processing, beverages, construction materials, clothing, paper products and shrimp.

In Pakistan SMEs have a significant contribution in the total GDP of Pakistan, according to SMEDA and 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.

% growth[70]

List	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	FY 2022
Industrial sector	8.78	-4.15	3.95	4.87	2.33	1.16	4.34	5.40	6.01	4.61	9.18	0.25	-5.75	8.20	6.83
Manufacturing	6.14	-3.94	1.73	2.61	2.01	5.37	5.76	4.12	4.03	4.87	7.08	4.52	-7.80	10.52	10.86
Mining	3.70	-1.04	2.42	-4.04	5.26	1.77	1.02	3.95	5.64	-0.89	7.26	0.54	-7.17	1.72	-7.00
Construction	13.37	-6.70	7.27	-7.97	2.17	5.40	3.19	8.33	14.37	10.20	19.55	-18.14	-3.08	2.39	1.90

It is the largest of Pakistan's industrial sectors, accounting for approximately 12.13% of GDP.[73] 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.[74] Major sectors in industries include cement, fertiliser, edible oil, sugar, steel, tobacco, chemicals, machinery, food processing and medical instruments, primarily surgical.[75][76][77] Pakistan is one of the largest manufacturers and exporters of surgical instruments.[78][79]

Production of Selected Manufactured Goods[80]

Manufactured Goods	Unit of quantity	2016	2017	2018	2019	2020	2021	2022	2023
Cotton Yarn	Metric Tonne (000)	3,406	3,428	3,430	3,431	3,060	3,442	3,459	2,695
Jute Goods		55	60	74	67	65	70	58	63
Cooking Oil		380	390	391	406	442	460	510	567
Sugar		5,115	7,049	6,566	5,260	4,881	5,694	7,921	6,709
Cement		35,432	37,022	41,148	39,924	39,121	49,797	48,011	41,448
Paper & Board		610	669	731	704	707	730	825	792
Caustic Soda		225	224	270	247	342	394	405	476
Hydrogen Chloride		172	177	251	425	361	417	510	525
Sulphuric Acid		75	56	49	49	40	72	111	71
Vegetable Ghee	Liters (000)	1,241	1,280	1,347	1,392	1,454	1,455	1,393	1,554
Cotton Cloth	Million Meters	1,039	1,043	1,044	1,046	935	1,048	1,051	921
Cigarettes	Billion Numbers	54	34	59	61	46	52	60	43
Nitrogenous Fertilizers	NT (000)	3,018	3,063	2,758	2,990	3,139	3,324	3,391	3,163
Phosphatic Fertilizers		664	683	619	633	631	748	804	616
Cycle Tyres & Tubes	Numbers (000)	11,490	11,507	11,470	14,491	13,496	10,314	10,876	10,702
Motor Tyres & Tubes		34,202	34,345	35,057	36,321	35,678	31,906	30,296	30,515
Motorcycle		2,071	2,501	2,825	2,460	1,813	2,476	2,190	1,289
Bicycle		199	200	200	174	141	79	141	146
Electric Transformers		33	37	47	31	23	29	35	32
Refrigerators		1,477	1,834	1,348	1,084	716	1,351	1,389	1,008
Air Conditioners		388	471	451	518	216	508	540	347
Electric Fans		2,033	2,523	2,596	2,591	2,124	2,499	2,600	2,182
Electric Meters		1,310	1,923	1,715	1,550	1,039	1,419	2,030	2,038
Motor Spirits/Petrol	Million Liters	2,216	2,518	2,988	3,085	2,684	3,424	3,392	3,051
High Speed Diesel		5,236	5,467	6,283	5,665	4,529	5,612	5,615	4,655
Furnace Oil		3,080	3,215	3,478	3,063	2,370	2,717	2,567	2,191
Jeeps & Cars	Numbers	180,717	193,996	231,738	218,845	106,764	182,389	271,923	131,978
Tractors	Numbers	34,914	53,975	71,894	49,902	32,608	50,700	58,922	31,752
Trucks & Buses	Numbers	8,331	10,548	13,425	9,684	4,848	5,977	7,934	4,839

Pakistan's largest corporations are mostly involved in utilities like oil, gas, electricity, automobile, cement, food, chemicals, fertilizer, civil aviation, textile, and telecommunication.

Their assets, sales and profit/loss for year 2021 is listed below:[49]

In 1947, Pakistan had inherited four cement plants with a total capacity of 0.5 million tons. Some expansion took place in 1956–66 but could not keep pace with the economic development and the country had to resort to imports of cement in 1976–77 and continued to do so until 1994–95. The cement sector consisting of 27 plants is contributing above Rs 30 billion to the national exchequer in the form of taxes. However, by 2013, Pakistan's cement is fast-growing mainly because of demand from Afghanistan and countries boosting real estate sector. The government has introduced an incentive package for the construction industry in April 2020, which stimulated the industry especially the private sector housing projects. Package included amnesty scheme, tax exemptions and Rs 36 billion subsidy for Naya Pakistan Housing Scheme. Further, banks were directed to increase construction sector loans to 5 percent of their total loan book and FED reduction on cement from Rs 2/kg to Rs 1.5/kg have given impetus to this industry.[81]

Fertilizer is an important and costly input responsible for 30 to 50 percent increase in the crop productivity. The overall objective is sustainability and growth in agricultural sector that should match the growing population for food security and the promotion of economic growth. There are nine urea manufacturing plants, one DAP, three NP, four SSP, two CAN, one SOP and two plants of blended NPKs having a total production capacity of 9,172 thousand tonnes per annum in 2021. Urea is main fertilizer having 70 percent share in total production. Installed production capacity of 6,307 thousand tonnes per annum is enough to meet local demand subject to the availability of uninterrupted gas and RLNG supply.

Captured Tank in Pakistan Army Museum

The defence industry of Pakistan, under the Ministry of Defence Production, was created in September 1951 to promote and coordinate the patchwork of military production facilities that have developed since independence. It is currently actively participating in many joint production projects such as Al Khalid 2 tank, advance trainer aircraft, combat aircraft, Artillery Systems like MRLS, Combat and Surveillance drones like GIDS Shahpar-1 and Shahpar-2, Battle Management and Surveillance Radars, Electronic warfare systems, navy ships, and submarines. Pakistan is manufacturing and selling weapons to over 40 countries including European customers, bringing in $620 million annually. The country's sophisticated arms imports increased by 119 percent between 2004–2008 and 2009–13, with China providing 54pc and the USA 27pc of Pakistan's imports.

Most of the Textile Industry is established in Punjab. Before 1990, the situation was different; most of the industry was in Karachi.

Currently, the textile industry comprises two main components: a highly organized large-scale sector and a significantly fragmented cottage/small-scale sector. The organized sector primarily encompasses integrated Textile Mills, housing numerous spinning units and a limited number of shuttle-less loom units. On the other hand, the unorganized sector encompasses downstream industries like Weaving, Finishing, Garment, Towels, and Hosiery, all of which hold substantial export potential. Within this sector, certain enterprises have expanded to an international scale and exhibit progressive business philosophies.

Sunday textile market on the sidewalks of Karachi, Pakistan.

As of June 2021, the Pakistani textile industry consists of 517 textile units, comprising 40 composite units and 477 spinning units. This landscape also encompasses 28,500 shuttle-less looms and 375,000 conventional looms. The Spinning Sector's growth has been driven by export demands and cotton production, with subsequent growth observed in the Weaving & Processing Sector. Notably, independent air-jet weaving units have been established, both as standalone entities and in conjunction with spinning or processing units.

A noteworthy trend is the ongoing backward integration of some clothing units, while concurrently, spinning units are actively developing weaving, finishing, and assembly capabilities to create a comprehensive supply chain. This symbiotic relationship between the Textile and Clothing sectors is leading to horizontal and vertical integration, often managed by the same entities or through business collaborations.[85]

This sector contributes nearly one-fourth of industrial value-added and provides employment to about 40 percent of industrial labor force. Barring seasonal and cyclical fluctuations, textiles products have maintained an average share of about 60 percent in national exports.

Cars on Shahrah-e-Faisal road Karachi.

The auto sector constitutes about 7 percent to LSM in 2021, which accounts for the significant industrial output of the country. According to PBS, automobile recorded 23.4 percent upsurge during July–March FY2021. In 2021, government has announced Pakistan's new Auto Policy 2021–2026.[86] Given government support, removal of irritants is soon going to bear fruits in the wake of industrial expansion as many new investors have joined with commercial production while the existing players have already made huge investments and a lot more is in waiting. Among the automakers that are yet to start production, Proton, MG, and Volkswagen are the names that could make a significant impact in the local passenger vehicle market. Meanwhile, KIA, Hyundai, Changan, and Prince DFSK have already started productions in Pakistan.[87]

Note: These figures do not include the production / sale of companies which are not members of Pakistan Automotive Manufacturers Association (PAMA).

After the entry of new models and brands by new entrants and due to the significant low benchmark interest rate of 7%, the consumer financing hit an all-time high in 2021. This trend started when a new Automotive Development Policy (2016-2021) was first approved by the ECC in its meeting held on March 18, 2016.

Such growth in demand for car financing was last seen during President Pervez Musharraf's regime (2001-2008) when banks, having ample liquidity, lent significant amount for cars without checking borrowers’ capabilities whether they were able to repay the debt. Later on, the car financing bubble busted when a large number of people defaulted on paying off the car financing.

Khewra Salt Mine Jhelum District.

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 6,00,000 km² of 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 8 fiscal years is given in the table below :-[89]

Minerals	Unit of Quantity	2014-15	2015-16	2016-17	2017-18	2018-19	2019-20	2020-21	2021-22
Coal	Metric ton (000)	3,407	3,750	3,954	4,478	5,407	8,428	9,230	9,677
Natural Gas	MMCFT (000)	1,466	1,482	1,472	1,459	1,437	1,317	1,279	1,308
Crude Oil	JSB (000)	34,490	31,652	32,269	32,557	32,495	28,091	27,560	28,098
Chromite	Metric ton	100,516	69,333	105,238	97,420	138,244	121,435	134,000	195,000
Dolomite	Metric ton	223,117	666,755	301,124	488,825	472,474	302,045	388,000	487,000
Gypsum	Metric ton (000)	1,417	1,872	2,080	2,476	2,518	2,150	2,527	2,325
Limestone	Metric ton (000)	40,470	46,123	52,149	70,819	75,596	65,810	76,632	58,362
Rock salt	Metric ton (000)	2,136	3,553	3,534	3,654	3,799	3,369	3,366	2,716
Sulphur	Metric ton	19,730	14,869	23,740	22,040	20,715	19,948	19,000	16,000
Barytes	Metric ton	24,689	57,024	75,375	145,189	116,480	55,341	52,000	128,000
Soap stone	Metric ton	100,724	125,985	152,279	141,504	156,935	150,009	289,000	n/a
Marble	Metric ton (000)	2,816	4,747	4,906	8,813	7,736	5,797	7,917	6,626

Wind power plant between Karachi and Hyderabad.

Main sources of Pakistan primary energy supplies include Gas, Oil, Coal, imported LNG and Hydro electricity with the share of 33.1%, 22.6%, 18.3%, 10.3% and 9.9% respectively in 2020. Since the coal mining in Thar desert and the LNG imports from Qatar, Coal and imported LNG have increased their shares manyfold in just 5 years in primary energy supplies of country. The share of Gas is decreasing from 50% in 2005 to 33% in 2020 and oil since 2015 from 35% to 23% in 2020 and are replacing largely by Coal and LNG. As Pakistan intends to generate around 8,800 megawatts of nuclear power by 2030 and 40,000 megawatts by 2050, its share is also increasing gradually.

Primary Energy Supplies by Source[90]

Fiscal Year	Unit	Gas	Oil	Coal	LNG Import	Hydro Electricity	Nuclear Electricity	LPG	Renewable Electricity	Imported Electricity	Total
2005	MTOE	27.95	16.33	4.23	-	6.13	0.67	0.25	-	0.03	55.59
	%Share	50.3	29.4	7.6	-	11.0	1.2	0.5	-	0.0	100
2010	MTOE	30.81	19.81	4.62	-	6.71	0.69	0.40	-	0.06	63.09
	%Share	48.8	31.4	7.3	-	10.6	1.1	0.6	-	0.1	100
2015	MTOE	29.98	24.97	4.95	0.47	7.75	1.38	0.46	0.19	0.11	70.26
	%Share	42.7	35.5	7.0	0.7	11.0	2.0	0.7	0.3	0.1	100
2020	MTOE	26.66	18.19	14.71	8.32	8.02	2.58	1.03	0.99	0.12	80.62
	%Share	33.1	22.6	18.3	10.3	9.9	3.2	1.3	1.2	0.2	100

(CPPA-G) purchases electricity from power producers and the National Transmission and Despatch Company (NTDC) transmits this electricity via its transmission lines to Distribution Companies (DISCOs) which then distribute this electricity via their distribution lines to end consumers. For decades, the matter of balancing Pakistan's supply against the demand for electricity has remained a largely unresolved matter. Since 2018, the availability of electricity has improved with the substantial induction of generation capacity, but the cost of electricity has increased due to many factors like circular debt, fuel cost, currency devaluation, low recovery and Transmission and Distribution losses. Pakistan faces a significant challenge in revamping its network responsible for the supply of electricity.

NEPRA Reports[90]

indicator	2010	2013	2016	2017	2018	2019	2020	2021	2022
Installed Capacity (MW)	22,064	23,725	25,421	28,712	35,979	38,995	38,719	39,772	43,775
Electricity Generation (GWh)	100,020	98,655	114,093	120,622	133,588	137,005	134,242	143,589	153,874
Electricity Consumption (GWh)	78,768	81,389	94,354	99,616	110,891	113,142	112,071	121,206	133,665
Transmission losses (%)	3.15	3.05	2.57	2.31	2.43	2.83	2.76	2.78	2.62
Distribution losses (%)	18.37	18.59	18.14	17.93	18.32	17.61	18.86	17.95	17.13
(%) share in Electricity Generation
Hydel	28.56	30.44	30.29	26.59	21.01	24.16	28.83	27.02	23.10
Thermal	68.50	64.91	64.57	65.34	68.87	65.25	60.21	61.76	60.50
Nuclear	2.67	4.24	3.70	5.20	6.78	6.67	7.37	7.72	11.89
Renewable Energy	0.01	0.03	1.04	2.45	2.92	3.57	3.21	3.15	4.18
Import					0.42	0.36	0.38	0.35	0.33

The total demand for petroleum products remained at 23.1 million tonnes during FY2022. The transport and power sectors are major petroleum consumers, covering around 90 percent of total demand.[91]

Pakistan is an importer of petroleum products and crude oil. Imports of petroleum products during FY2022 are around 12.9 million tonnes, valued at more than US$ 11.1 billion. The major imported products are Motor Spirit/Gasoline, High Speed Diesel, and Furnace Oil, with import quantities of 6,502 thousand tonnes, 3,950 thousand tonnes, and 2,258 thousand tonnes, respectively.

The total production of refineries in Pakistan for the fiscal year 2020-21 reached 10.66 million tons. Among these refineries, PARCO holds the largest share, accounting for 41%, followed by ARL, BPPL, NRL, and PRL with shares of 17%, 16%, 14%, and 12% respectively. OGRA, founded in March 2002, serves as the regulatory body with the primary goals of promoting competition and enhancing private investment and ownership within the petroleum sector by implementing effective and efficient regulations. Oil Marketing Companies (OMCs) have established their infrastructure, including storage facilities and retail outlets, to market Petroleum, Oil, and Lubricant (POL) products. Motor Spirit (MS) and High-Speed Diesel (HSD) together make up nearly 80% of OMCs' sales. By the conclusion of the fiscal year 2021, OMCs had developed a storage capacity of 0.58 million tons for MS and 0.88 million tons for HSD, distributed across various depots throughout the country. Oil Marketing Companies (OMCs) operate a total of 9,978 retail outlets nationwide. Among these, Pakistan State Oil (PSO) holds the highest number of retail outlets, boasting 3,158 outlets, which accounts for approximately 31.65 percent of the total.[92]

Indigenous natural gas supplies accounted for approximately 30 percent of Pakistan's total primary energy supply mix in FY2022. Pakistan maintains an extensive gas network comprising over 13,775 kilometers of transmission pipelines, 157,395 kilometers of main pipelines, and 41,352 kilometers of service pipelines. This network serves the needs of more than 10.7 million consumers throughout the country. During FY 2021-22, the natural gas supply in Pakistan reached 3,982 MMCFD. The country relies on several major gas fields, including Sui, Uch, Qadirpur, Sawan, Zamzama, Badin, Bhit, Kandhkot, Mari, and Manzalai, to meet its domestic demand. Additionally, Pakistan has been importing Liquified Natural Gas (LNG) since 2015, with Regasified Liquefied Natural Gas (RLNG) playing a significant role in alleviating natural gas shortages. In the year 2021-22, approximately 24 percent of the country's gas supplies were sourced from imported RLNG.

In FY 2020-21, the primary consumer of natural gas was the power sector, which accounted for more than 30 percent of the total consumption, equivalent to 1,208 MMCFD. Following the power sector, the domestic sector consumed 21 percent, or 850 MMCFD, while the fertilizer sector consumed 20 percent, totaling 834 MMCFD.[92]

Pakistan's service sector accounts for about 61.7% of GDP.[65] Transport, storage, communications, finance, and insurance account for 24% of this sector, and wholesale and retail trade about 30%. Pakistan is trying to promote the information industry and other modern service industries through incentives such as long-term tax holidays.

% growth[70]

List	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	FY 2022
Service sector	4.72	1.84	2.63	2.86	3.48	5.13	3.82	4.20	5.03	5.62	5.95	5.00	-1.21	5.91	6.59

PTCL's One Stop Shop in Islamabad

After the deregulation of the telecommunication industry, the sector has seen an exponential growth. Pakistan Telecommunication Company Ltd has emerged as a successful Forbes 2000 conglomerate with over US$1 billion in sales in 2005. The mobile telephone market has exploded many-fold since 2003 to reach a subscriber base of 140 million users in July 2017, one of the highest mobile teledensities in the entire world.[93] Pakistan won the prestigious Government Leadership award of GSM Association in 2006.[94]

In Pakistan, the following are the top mobile phone operators:

1. Jazz Pakistan (parent: VEON, Netherlands)
2. Ufone (parent: PTCL (Etisalat), Pakistan/UAE)
3. Telenor (parent: Telenor, Norway)
4. Zong (parent: China Mobile, China)

By March 2009, Pakistan had 91 million mobile subscribers – 25 million more subscribers than reported in the same period in 2008. In addition to the 3.1 million fixed lines, while as many as 2.4 million are using Wireless Local Loop connections. Sony Ericsson, Nokia and Motorola along with Samsung and LG remain the most popular brands among customers.[95]

Since liberalisation, over the past four years from 2003 to 2007 the Pakistani telecom sector has attracted more than $9 billion in foreign investments.[96] During 2007–08, the Pakistani communication sector alone received $1.62 billion in Foreign Direct Investment (FDI) – about 30% of the country's total foreign direct investment.

According to the PC World, a total of 6.37 billion text messages were sent through Acision messaging systems across Asia Pacific over the 2008/2009 Christmas and New Year period.[97] Pakistan was amongst the top five ranker with one of the highest SMS traffic with 763 million messages. On 14 August 2010, Pakistan became the first country in the world to experience EVDO's RevB 3G technology that offers maximum speeds of 9.3 Mbit/s.

3G and 4G was simultaneously launched in Pakistan on 23 April 2014 through a SMRA auction. Three out of five companies got a 3G licence i.e. Ufone, Mobilink and Telenor while China Mobile's Zong got 3G as well as a 4G licence. Whereas fifth company, Warid Pakistan did not participate in the auction procedure, But they launched 4G LTE services on their existing 2G 1800 MHz spectrum due to Technology neutral terms and became world's first Telecom Company to transform directly from 2G to 4G. With that Pakistan joined the 3G and 4G world. In December 2017, 3G and 4G subscribers in Pakistan reached to 46 millions.[93]

After the successful implementation of Device Identification Registration and Blocking System (DIRBS) in 2019 along with comprehensive mobile manufacturing policy, created a favorable environment for mobile device manufacturing in Pakistan. For the first time in history of Pakistan, local mobile phone manufacturing exceeded the number of mobile phones that were imported in 2021. Mobile Device Manufacturing (MDM) licence have been issued to 26 companies including Samsung, Nokia, Oppo, TECNO, Infinix, Vgotel, Q-mobile etc.[98]

Jinnah Int. Airport in Karachi, Pakistan.

The year 1955 marked the inauguration of the Pakistan airline's first scheduled international service – to London, via Cairo and Rome. In 1959, the Government of Pakistan appointed Air Commodore Nur Khan as the managing director of PIA. With his visionary leadership, PIA ‘took off’ and within a short span of 6 years, gained the stature and status of one of the world's frontline carriers. In aviation circles, this period has often been referred to as the "golden years of PIA".On 29 April 1964, with a Boeing 720B, PIA earned the distinction of becoming the first airline from a non-communist country to fly into the People's Republic of China. Private sector airlines in Pakistan include Airblue, which serves the main cities within Pakistan in addition to destinations in the Persian Gulf and Manchester in the United Kingdom.

Pakistan Railway Train.

Pakistan Railways (PR) is a major mode of transport in the public sector, contributing to the country's economic growth and providing national integration. 13 May 1861 was a historical day when the first railway line was opened for public between Karachi City and Kotri, a distance of 169 Kms. In 1885, the Sindh, Punjab and Delhi Railways were purchased by the Secretary of State for India. On 1 January 1886 this line and other State Railways were integrated and North Western State Railway was formed; which was later on renamed as North Western Railways (NWR). At the time of Independence, the NWR was bifurcated with 1,847 route miles lying in India and 5,048 route miles in Pakistan. In 2022, Pakistan Railways comprised a total of 467 locomotives (462 Diesel Engine and 05 Steam Engines) for the 7,479 km route length. Pakistan Railways employs 60,643 people in the year 2022.

Karakoram highway.

The National Highway Authority (NHA) was created, in 1991, through an Act of the Parliament, for planning, development, operation, repair and maintenance of National Highways and Strategic Roads specially entrusted to NHA by the Federal Government or by a Provincial Government or other authority concerned. NHA is custodian of 39 national highways/ motorways/ expressway/ strategic routes having a total length of 12,131 km. It is 4.6% of total national roads network i.e. 263,775 km, however, it carries 80% of commercial traffic and N-5 which is blood-line of Pakistan, carries 65% of this load in the country.

Port of Karachi.

Pakistan National Shipping Corporation (PNSC) is a National flag carrier. It came into existence by a merger of National Shipping Corporation (NSC) and Pakistan Shipping Corporation in 1979. PNSC has worldwide operations in the Dry Bulk segment of shipping market since incorporation and is involved in transportation of liquid cargo since 1998 locally and internationally. The corporation's head office is located in Karachi. At present, PNSC fleet comprises 11 vessels of various types/sizes (05 Bulk carriers,04 Aframax tankers and 02 LR-1 Clean Product tankers) with a total deadweight capacity (cargo carrying capacity) of 831,711 metric tons, the highest ever carrying capacity since inception of PNSC.[103]

Pakistan has a large and diverse banking system. In 1974, a nationalization program led to the creation of six government-owned banks.[104] A privatization program in the 1990s led to the entry of foreign-owned and local banks into the industry.[104] As of 2010, there were five public-owned commercial banks in Pakistan, as well as 25 domestic private banks, six multi-national banks and four specialized banks.[104]

A part of Downtown Karachi, Showing the MCB Tower and Habib Bank Plaza. The headquarters of many banks in Pakistan can be found here.

Since 2000 Pakistani banks have begun aggressive marketing of consumer finance to the emerging middle class, allowing for a consumption boom (more than a 7-month waiting list for certain car models) as well as a construction bonanza. Pakistan's banking sector remained remarkably strong and resilient during the world financial crisis in 2008–09, a feature which has served to attract a substantial amount of FDI in the sector. Stress tests conducted in June 2008 data indicate that the large banks are relatively robust, with the medium and small-sized banks positioning themselves in niche markets.

The Pakistan Bureau of Statistics provisionally valued this sector at Rs.807,807 million in 2012 thus registering over 510% growth since 2000.[105]

An article published in Journal of the Asia Pacific Economy by Mete Feridun of University of Greenwich in London with his Pakistani colleague Abdul Jalil presents strong econometric evidence that financial development fosters economic growth in Pakistan.[106]