What do you need to know about doing business in Pakistan? A country’s economy is not only affected by what’s going on now, but how the country’s economy has been in the past. Let’s take a look at Pakistan economy facts.
According to the World Bank, Pakistan has a semi-industrialized economy. The growth poles of the Pakistani economy are situated along the Indus River. Diversified economies of Karachi and Punjab’s urban centres, coexist with lesser developed areas in other parts of the country. Despite being a very poor country in 1947, Pakistan’s economic growth rate has been better than the global average during the subsequent four decades. However, according to the Pakistan Trade Authority, imprudent policies led to a slowdown in the late 1990s.
According to Bloomberg, Pakistan today is regarded as to having the second largest economy in South Asia. With the IMF putting Pakistan’s Nominal GDP at approximately $203 billion and GDP measured in PPP at approximately $483 billion. The structure of the Pakistani economy has changed from a mainly agricultural base to a strong service base, Agriculture now only accounts for roughly 20% of the GDP, while the service sector accounts for 53% of the GDP, according to a report by the Pakistani Government on the sector share of by industry. Other important industries include apparel and textiles (accounting for nearly 60% of exports), food processing, chemicals manufacture, and the iron and steel industries, as published by Nations Encyclopedia. In 2009, The World Economic Forum’s Travel & Tourism Competitiveness Report ranked Pakistan as one of the top 25% tourist destinations for its World Heritage sites. There has also been a surge in Pakistan’s exports, with the CIA World Factbook stating that exports amounted to $20.62 billion in 2008. Also according to an article by Dawn Pakistani News, recent decades have seen the emergence of a strong and rapidly growing middle class in cities like Karachi, Lahore, Islamabad, Rawalpindi, Hyderabad, Faisalabad, Multan and Peshawar numbering over 30 million. This middle class along with the 17 million belonging to the elite upper and upper-middle classes wish to move in a more centrist and urbanised direction, as opposed to the rural hinterlands.
However, for all these positives, there are still a number of serious challenges that Pakistan’s economy and the country as a whole face. The 2010 Pakistan floods began in late July 2010, resulting from heavy monsoon rains in the mountain regions of Pakistan, eventually resulting in approximately one-fifth of Pakistan’s total land area going underwater, according to BBC news. According to Pakistani government data the floods directly affected about 20 million people, mostly by destruction of property, livelihood and infrastructure, with a death toll of close to 2,000. In a report by Ball State University, the Pakistani economy was suffered extensive damage to infrastructure and crops, as well as damage to structures was estimated to exceed US$4 billion, and wheat crop damages were estimated to be over US$500 million. The total economic impact may have been as much as US$43 billion. So while the death toll may have been relatively small with 2000 deaths for a nation of nearly a 178 million people, the economic damage was extensive for a country that is still relatively poor. However, the flood damage is just one of the things that are troubling Pakistan at the moment.
The Pakistani government is affected by serious levels of corruption, with Transparency International ranking Pakistan at 134 out of 182 countries in 2011. This corruption pervades many parts of Pakistani society, and even affects the military and intelligence community to the point where Pakistan’s ISI (Inter-Services Intelligence) is considered to be sponsoring terrorists that are attacking the Pakistani National government. There is a huge proliferation of various terrorist groups in Pakistan, with Pakistani based terrorists attacking targets in India and American troops in Afghanistan. The Pakistani government claims to be fighting these groups, however it has come under strong attacks by countries like the US and India for allegedly engaging in state sponsored terrorism. Since 2004, Pakistani armed forces have engaged in fighting against Pakistani Taliban groups, as a result militant groups have engaged in suicide bombings in Pakistani cities, killing more than 3,000 civilians and armed personnel in 2009 alone, according to the Guardian. So Pakistan seems to be at war with itself, resulting in a high level of societal instability and low rates of economic growth. While there are opportunities in Pakistan for trade, there are some major problems that businesses will have to deal with in order to take advantage of these opportunities.