What's wrong with the Pakistani economy

Economy of Pakistan

The Pakistani economy is not one of the best examples on the Asian continent. Pending reforms, a rather weak government and flourishing corruption are just as serious obstacles as the tense security situation and the often inadequate infrastructure, especially in the energy supply. In 2013 economic growth was estimated at 3.6 percent, and in 2016 the economy grew by 5.7 percent.

Inflation in Pakistan

However, inflation has developed positively recently, which is also due to the price development on the world markets. This figure was reduced from almost 14% in 2012 to just under 4% at the end of the budget year in summer 2018.

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Foreign exchange and budget deficits

The budget deficit in 2016 was around 4.5% of gross domestic product. This is mainly due to the support of various state-owned companies such as Pakistan Railways, Pakistan International Airlines and Pakistan Steel, which devour a large amount of funding. Nevertheless, the country has been able to improve significantly, especially in recent years.

Unemployment Rate, Employment Sector and Poverty

In 2018 it was estimated that approximately 21% of the population lived below the poverty line of USD 1.25 per day. In contrast, there is an estimated unemployment rate of 5.5%, which is not very informative about the actual employment situation. The percentage distribution of the economic sectors shows that Pakistan is in a development or threshold situation: 43% of the people work in agriculture, only 20.3% are employed in industry and 36.6% are employed in the service sector.

Outside support

With the support of the International Monetary Fund (IMF), Pakistan is to work on reducing its budget deficit, building up currency reserves and reducing the inflation rate on a sustainable basis. Structural reforms in the tax system, the energy sector, the investment climate and financial stability are also under way. So far, the country has been able to meet all of its obligations.

Export products from Pakistan

In addition to mining, Pakistan produces textiles, building materials, chemicals and pharmaceuticals, steel products and vehicle parts in particular. The textile industry in particular produces for export, with the USA, followed by China and Great Britain being the main customers.