Economic Overview

Pakistan has achieved steady growth since 2013 in the aftermath of a credit facility agreement with the IMF. Economic growth slowed in recent years due to measures taken by the authorities to address macroeconomic imbalances and turned negative in the aftermath of the COVID-19 pandemic. According to the IMF's estimates, growth picked up in 2022 reaching 6% of GDP, but it turned negative again in 2023 (-0.5%), due to the efforts to stabilize the economy through tackling fiscal and external imbalances and to a contraction in private consumption caused by the loss of income of rural populations amid floods that devastated the agricultural sector and by rising inflation. The IMF has revised down Pakistan's growth estimate for fiscal year 2024 to 2%, followed by 3.5% in 2025.

Concerning public finances, Fitch Ratings anticipates that the consolidated general government fiscal deficit will decrease to 6.8% of GDP in FY24, down from an estimated 7.8% in FY23. This improvement is fueled by a shift in the primary balance to a surplus of 0.3% of GDP, compared to a primary deficit of 0.8% of GDP in FY23. The fiscal balance is being bolstered by factors such as inflation, new revenue measures, and enhanced discipline concerning tax exemptions, subsidies, and other expenditures, including those at the provincial level. The public debt-to-GDP ratio stood at 76.6% in 2023 and should decrease marginally this year (72.2%) and in 2025 (70.4% - IMF). Overall, Pakistan's debt dynamics remain stable due to robust nominal growth over the medium term, wherein high inflation acts to counterbalance the strain from elevated domestic interest costs. Pakistan experienced its highest-ever inflation in 2023, estimated at 29.2%. It should remain high over the forecast horizon (around 23.6% in 2024 and 12.2% the following year), as per the IMF. In July 2023, the IMF disbursed USD 1.2 billion, followed by an additional USD 700 million after the approval of a staff-level agreement in January 2024. This leaves USD 1.1 billion to be disbursed pending a review scheduled for March 2024.

Pakistan's unemployment rate stood increased to 8.5% in 2023 (from 6.2% the previous year) and is expected to decrease to 8% and 7.5% in 2024 and 2025, respectively. Nevertheless, the number of people no longer actively seeking work is increasing. The level of underemployment remains very high, and much of the economy is informal. While the poverty rate has fallen by 40% over the last two decades, it is still high: using the lower-middle-income poverty rate of USD 3.65 per day, in fact, the World Bank calculated that Pakistan's poverty ratio stands at around 39.4%, with over 12.5 million Pakistanis falling below the poverty line in one year. The country has a low GDP per capita (PPP), estimated at USD 6,437 in 2022 by the World Bank (latest data available).unctad.org/system/files/official-document/wir2023_en.pdf

Foreign Trade

Despite economic and political difficulties, Pakistan has taken steps to liberalize its trade and investment framework as part of commitments made with the WTO, IMF, and the World Bank. Nevertheless, the share of foreign trade in Pakistan's GDP continues to be low, at 33% (World Bank, latest data available). Textile products account by far for the largest share of exports (around 60%, mostly comprising linen, clothing, and cotton, making the country the 7th textile exporter in the world), followed by rice (3.32 million tons between July 2023-January 2024). In regards to imports, the largest items are petroleum products, palm oil, telephones, and coal (Comtrade).

The United States is the top destination for Pakistani exports (20.1%, mainly textile), ahead of China (8.2%), the United Kingdom (6.5%), the Netherlands (5.8%), and Germany (5.7%). Conversely, China is by far the largest supplier of goods to Pakistan (23%), followed by the United Arab Emirates (11.2%), Saudi Arabia (7.2%), Indonesia (7%), Qatar (5.8%), and the United States (4.4% - data Comtrade).

Pakistan's trade structure has been structurally in deficit and has been worsening in recent years: in 2022, imports of goods stood at USD 71 billion (-1.9% year-on-year), while exports grew 9.2%, totaling USD 30.9 billion. Concerning the trade of services, imports reached USD 10.5 billion, whereas exports amounted to USD 7.3 billion. For the same year, the World Bank estimated the country’s trade deficit at 12% of GDP (from 8.9% one year earlier). According to preliminary figures from the Pakistan Bureau of Statistics, the cumulative trade deficit for the first five months of the fiscal year 2023-24 (July-November) amounted to USD 9.45 billion, reflecting a 17.01% decrease in dollar terms compared to the same period the previous year. During the same period, cumulative exports totaled USD 12.17 billion, indicating a 1.9% increase, while cumulative imports totaled USD 21.6 billion (-17%).

COVID-19 Country Response

Travel restrictions

Regularly updated travel information for all countries with regards to Covid-19 related entry regulations, flight bans, test and vaccines requirements is available on TravelDoc Infopage.
To find information about the current travel regulations, including health requirements, it is also advised to consult Travel Regulations Map provided and updated on a daily basis by IATA.

Import & export restrictions

A general overview of trade restrictions which were adopted by different countries during the COVID-19 pandemic is available on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.

Economic recovery plan

For the general overview of the key economic policy responses to the COVID-19 pandemic (fiscal, monetary and macroeconomic) undertaken by the government of Pakistan, please consult the country's dedicated section in the IMF’s Policy Tracker platform.

Support plan for businesses

For an evaluation of impact of the Covid pandemic on SMEs and an inventory of country responses to foster SME resilience, refer to the OECD's SME Covid-19 Policy Responses document.
You can also consult the World Bank's Map of SME-Support Measures in Response to COVID-19.