Pakistan’s economy stands as one of the most significant in South Asia, with a gross domestic product measured at approximately 371 billion US dollars in 2024 according to current market prices. When evaluated through the lens of purchasing power parity, which accounts for cost of living differences across countries, Pakistan ranks as the world’s twenty-third largest economy, though its nominal position places it closer to fortieth globally. This gap between PPP and nominal rankings reflects the relatively lower price levels within the country compared to advanced economies.
The economic structure of Pakistan has undergone substantial transformation since independence in 1947. At that time, the nation inherited merely thirty-four industrial units from the partitioned subcontinent, contributing a mere seven percent to the gross domestic product. Today, the landscape has shifted dramatically, with the services sector emerging as the dominant force, contributing roughly fifty-eight percent of the total economic output. This sector encompasses a diverse array of activities including wholesale and retail trade, which alone accounts for nearly a third of services value added, alongside transport and storage operations, financial and insurance services, information technology, and public administration. The services sector has demonstrated remarkable resilience, posting growth rates that consistently outpace both agriculture and industry while providing employment for over one-third of the nation’s workforce.
Agriculture, despite its declining share of gross domestic product from over fifty percent at independence to approximately twenty-four percent today, remains fundamentally important to Pakistan’s economic foundation. The sector still employs nearly forty percent of the labor force and serves as the primary source of raw materials for the country’s industrial base. Pakistan ranks among the world’s top producers of several key commodities, holding the fourth position globally in cotton production, fifth in sugarcane, and featuring prominently in wheat and rice production. The agricultural landscape is dominated by major crops including wheat, which contributes over twelve percent of agricultural value added, along with cotton, rice, and sugarcane. These four crops collectively account for more than half of the total crop output value. Beyond crop cultivation, livestock has emerged as the largest contributor within agriculture, representing approximately sixty-two percent of the sector’s value added and nearly fifteen percent of the national gross domestic product. Over eight million rural families derive between thirty-five and forty percent of their income from animal husbandry activities.
The industrial sector contributes roughly eighteen percent to the gross domestic product and serves as a critical bridge between agricultural raw materials and finished goods. Manufacturing represents the largest component within industry, contributing about twelve percent to overall GDP, with large-scale manufacturing accounting for the majority of this output. Textiles stand as the crown jewel of Pakistani manufacturing, representing approximately sixty percent of total exports and employing vast segments of the industrial workforce. Pakistan ranks as the eighth largest textile exporter in Asia and maintains the third largest spinning capacity on the continent. The textile ecosystem encompasses over a thousand ginning units, hundreds of spinning facilities, and numerous weaving and garment manufacturing operations concentrated primarily in Punjab and Sindh provinces.
Beyond textiles, Pakistan’s industrial base includes significant cement production capabilities, with over thirty large enterprises serving domestic construction needs and export markets. The fertilizer industry supports the agricultural sector’s productivity requirements, while food processing adds value to the nation’s abundant agricultural output. The automotive sector, though smaller in relative terms at approximately four percent of GDP, has developed substantial local manufacturing capabilities and supply chains. Chemicals, pharmaceuticals, and leather goods represent additional industrial strengths, with the leather industry alone employing over half a million people directly and indirectly.
Energy production and distribution constitute another vital industrial component, with Pakistan generating over 137,000 gigawatt-hours of electricity annually through a mix of thermal, hydel, nuclear, and renewable sources. Mining and quarrying, while contributing a smaller share to GDP, provide essential raw materials including coal, minerals, and construction materials that feed into other sectors. Construction activity accounts for approximately two percent of economic output, reflecting ongoing infrastructure development and urbanization trends.
Small and medium enterprises play an outsized role in Pakistan’s economic fabric, representing nearly ninety percent of all enterprises and employing eighty percent of the non-agricultural labor force. These businesses contribute an estimated forty percent to the annual GDP, operating largely within the informal sector and providing crucial employment opportunities across urban and rural landscapes. The information technology sector has emerged as a particularly dynamic segment within services, with computer programming and consultancy services growing at rates exceeding twenty-four percent annually.
Pakistan’s economic orientation remains fundamentally consumption-driven, with household consumption historically representing over ninety percent of GDP. Investment levels have averaged around fifteen to twenty percent of GDP, while the trade balance typically runs in deficit, with imports of fuel, machinery, and industrial equipment exceeding exports of textiles, agricultural products, and manufactured goods. Remittances from overseas workers provide crucial support to the external accounts, with Pakistan ranking among the world’s top ten recipients of such flows.
The economy faces ongoing challenges including energy constraints, inflationary pressures, and the need for structural reforms to broaden the tax base and improve competitiveness. Nevertheless, the demographic profile offers significant potential, with a young and growing population providing both a substantial labor force and an expanding consumer market. The strategic geographic position at the crossroads of South Asia, Central Asia, and the Middle East presents opportunities for trade and transit corridors that could reshape economic trajectories in the coming decades.
