Economy of Pakistan

Pakistan is a developing country with an emerging economy and has a potential to become world’s 20th largest economy by 2030. With GDP (PPP) of $1.202 trillion, the economy of Pakistan is 24th largest in the world in terms of purchasing power parity, and 42nd largest in terms of nominal GDP of $284.2 billion. The GDP growth rate was recorded as 3.94%Δ in 2020-21.

Pakistan has a mixed economy with three main sectors:

  1. Agriculture
  2. Industry, and
  3. Services sector

However, the economy has been severely affected by continuous adverse civil-military relations, repeated military coups, repeated conspiracies against the democratic process, political unrest, and unstable weak civilian government. These factors lead to poor law & order situation, mismanagement, lack of long-term planning, failure of bureaucratic functions, bad governance, and corruption in the country.


1. Agriculture
The agriculture sector contributes 19.3% to GDP. It is the largest employer absorbing 38.5% of the country’s total labour force. The agriculture sector recorded a growth of 2.67% in the financial year 2019-20. The agriculture sector has four sub-sectors: crops, livestock, fisheries, and forestry. Livestock is the most important sub-sector of the agriculture sector having share of 60.54% in agriculture and contributes 11.22% to the country’s total GDP.

2. Industry
The industrial sector contributes 20.47% to GDP. It is the major source of tax revenues for the government. The Industrial sector recorded a growth of –2.64% in the financial year 2019-20. The manufacturing is the most important sub-sector of the industrial sector containing 64.4% share in the overall industrial sector. Manufacturing provides employment to about 16.1% of the total labor force and contributes about 13.5% towards the overall GDP. The manufacturing has three components:

  • Large-Scale Manufacturing (LSM)
  • Small Scale Manufacturing (SSM), and
  • Construction

The Large Scale Manufacturing (LSM) has 78% share in the manufacturing sub-sector and contributes 9.5% in the total GDP. The important sub-sectors of the industry sector are: Textile Industry, Engineering Sector, Automobile Industry, Fertilizer Industry, Cement Industry, and Small and Medium Enterprises.

3. Services Sector
The services sector contributes 60.23% to GDP. It is the largest contributor to the Gross Domestic Product (GDP). The Services sector recorded a growth of –0.59% in the financial year 2019-20. The important sub-sectors of the services sector are: Transportation, Information and Communication, and Financial Services.

Textile Industry
Pakistan is 5th largest producer of cotton in the world, the raw material for textile industry. And, the textile is the most important manufacturing sector of Pakistan and has the longest production chain. The share of textiles products in national exports is almost 62%. Read More

Economy of Pakistan MCQs