Economy of Pakistan The economy of Pakistan is the 47th largest in the world in nominal terms and 27th largest

in the world in terms of purchasing power parity (PPP). Pakistan has a semi-industrialized economy,[13][14][15] which mainly encompasses textiles, chemicals, food processing, agriculture and other industries. Growth poles of Pakistan's economy are situated along the Indus River;[15][16] diversified economies of Karachi and Punjab's urban centers coexist with lesser developed areas in other parts of the country.[15] The economy has suffered in the past from decades of internal political disputes, a fast growing population, mixed levels of foreign investment, and a costly, ongoing confrontation with neighboring India. Foreign exchange reserves are bolstered by steady worker remittances, but a growing current account deficit – driven by a widening trade gap as import growth outstrips export expansion – could draw down reserves and dampen GDP growth in the medium term.[17] Economic history

First five decades

When it gained independence in 1947 from UK, Pakistan's average economic growth rate since independence has been higher than the average growth rate of the world economy during the period. Average annual real GDP growth rates[18] were 6.8% in the 1960s, 4.8% in the 1970s, and 6.5% in the 1980s. Average annual growth fell to 4.6% in the 1990s with significantly lower growth in the second half of that decade. See also[19] During the 1960s, Pakistan was seen as a model of economic development around the world, and there was much praise for its economic progression. Karachi was seen as an economic role model around the world, and there was much praise for the way its economy was progressing.[citation needed] Many countries sought to emulate Pakistan's economic planning strategy and one of them, South Korea, copied the city's second "Five-Year Plan" and World Financial Center in Seoul is designed and modeled after Karachi. Later, economic mismanagement in general, and fiscally imprudent economic policies in particular, caused a large increase in the country's public debt and led to slower growth in the 1970s and 1990s.The economy recovered during the 1980s via a policy of deregulation, as well as an increased inflow of foreign aid and remittances from expatriate workers. The economy today Due to inflation and economic crisis worldwide, Pakistan's economy reached a state of Balance of Payment crisis. "The International Monetary Fund bailed out Pakistan in November 2008 to avert a balance of payments crisis and in July last year increased the loan to $11.3 billion from an initial $7.6 billion."[25]

according to its five year credit default swap.During the mid-2000s.4 billion. Exceptional policies kept Pakistan's trade deficit controlled at $13 billion. with gaping trade deficits. For the first time in years. Kyber Pakhtunkhwa.5-4%.4 billion. Swat. essentially an ability to match the G7 in size”.[27] Tourism Main article: Tourism in Pakistan Malam Jabba Ski Resort. Concurrently. and that growth should pick up to over 5% per annum by 2011. it would represent an overcoming of the present crisis wherein growth is a mere 3. though it maintained the country’s rating at B2. The EIU estimates that inflation should drop back to single digits in 2010. Security concerns stemming from the nation's role in the War on Terror have created great instability and led to a decline in FDI from a height of approximately $8 bn to $3. the insurgency has forced massive capital flight from Pakistan to the Gulf. which has fallen from 60–1 USD to over 80-1 USD in a few months.[26] By October 2007. it may have to seek external funding as Balance of Payments support. Credit agency Moody’s Investors Service cut its outlook on Pakistan’s debt to negative from stable due to political uncertainty. Pakistan experienced a period of tremendous growth. Pakistan’s local currency debt rating was lowered to B-minus from BB-minus.800 basis points. revenue generation increased to become $13 billion and attracted foreign investment of $8. the dual impact has shocked Pakistan's economy. Consequently. Although less than the previous 5 year average of 7%.5bn for the current fiscal year. high inflation and a crash in the value of the Rupee. Combined with high global commodity prices. just several notches above a level that would indicate default. a level that indicates investors believe the country is already in or will soon be in default. The middle term however may be less turbulent. Due to its large population of 186 million. averaging 7% yearly GDP growth between 2003–07. S&P lowered Pakistan’s foreign currency debt rating to CCC-plus from B. Pakistan . Since the beginning of 2008. exports boomed to $18 billion. Pakistan raised back its Foreign Reserves to a handsome $16. it was included in 2005 by the Goldman Sachs Global Economics Group as one of the "Next Eleven (N-11)" – a group of countries with economies that “might have the kind of potential for global impact that the BRICs projections highlighted. depending on the political environment. Pakistan's economic outlook has taken stagnation.The cost of protection against a default in Pakistan’s sovereign debt trades at 1.

and most of the Income Tax is also collected indirectly. with many examples of Mughal architecture such as Badshahi Masjid.000 tourists annually. Pakistan is home to several mountain peaks over 7000 m. Himalayan and Karakoram range (which includes K2. home to small preIslamic Animist Kalasha community claiming descent from Alexander the Great. Lahore. ancient architecture and the Hunzaand Chitral valley.3 billion) during FY 2010–2011.[43] while it collected about 1558 billion ($18. Shalimar Gardens. Swat. collects almost 95% of the entire national revenue. especially K2. people and landscapes has attracted 0.Faisal Mosque in the capitalIslamabad. Tomb of Jahangir and the Lahore Fort. thanks to the Hippie trail. Tourism in Pakistan has been stated as being the tourism industry's "next big thing". with its diverse cultures. Pakistan's cultural capital. Quetta. The Federal Board of Revenue collected nearly one trillion rupees ($14. which attracts adventurers and mountaineers from around the world. Major attractions today include ruins of Indus valley civilization and mountain resorts in theHimalayas. which attract those interested in winter sports. The revenue collection has hovered below 10% of the GDP for the past several years. Karachi. Pakistan's tourism industry was in its heyday during the 1970s when the country received unprecedented amounts of foreign tourists. . The country's attraction range from the ruin of civilization such as Mohenjodaro.Gwadar and Rawalpindi. Peshawar and Lahore are major attractions for authentic Pakistani food and culture. Karachi. Harappa and Taxila. [edit]Revenue Although the country is a Federation with constitutional division of taxation powers between the Federal Government and the four provinces. Peshawar. Before the Global economic crisis. The north part of Pakistan has many old fortresses. The main destinations of choice for these tourists were the Khyber Pass.1 billion) in taxes in the 2007–2008 financial year. almost double to that of a decade ago. Punjab province has the site of Alexander's battle on the Jhelum River and the historic city of Lahore.7 million tourists to the country. the Federal board of Revenue. the second highest mountain peak in the world. The romance of the historic Khyber Pakhtunkhwa province is timeless and legendary. in the form of withholding taxes.Tourism in Pakistan is still a growing industry. Pakistan. the revenue department of the Federal Government. Pakistan received more than 500. attracts adventurers and mountaineers from around the world. to the Himalayan hill stations. The Federal Board of Revenue mainly relies on indirect taxation.

During July–March 2005–06. remittances. with a maximum of 25% (except for the car industry). and the oil sector targeted to be the next big privatisation operation. The recent improvements in the economy and the business environment have been recognised by international rating agencies such as Moody’s and Standard and Poor’s (country risk upgrade at the end of 2003).4 million.[80] Pakistan has achieved FDI of almost $8. especially since 1999. surpassing the government target of $4 billion.Foreign trade.[84] Tariffs have been reduced to an average rate of 16%. FDI year-on-year increased to $2.6 million and portfolio investment to $407.[83] Pakistan is attracting an increasingly large amount of private equity and was the ranked as number 20 in the world based on the amount of private equity entering the nation. dropping by 54. Unlimited remittance of profits. aid.[82] Pakistan is now the most investment-friendly nation in South Asia. has gained momentum. Business regulations have been profoundly overhauled along liberal lines. the State Bank of Pakistan (SBP) reported on April 24. service fees or capital is now the rule. The privatisation process. dividends.4 million during the first nine months of fiscal year 2006.1 million in the corresponding period last year. according to the Bank of Pakistan. Business regulations are now among the most liberal in the region.6% due to Pakistan's political instability and weak law and order. which started in the early 1990s.6 per cent year-on-year to US$2.22 billion and portfolio investment by 276 per cent to $407. according to the latest statistics released by the State Bank. Foreign investors do not face any restrictions on the inflow of capital.4 billion in the financial year 06/07.[81] Foreign investment had significantly declined by 2010. This was confirmed by the World Bank's Ease of Doing Business Index report published in September 2009 ranking Pakistan (at 85th) well ahead of neighbours like China (at 89th) and India (at 133rd). Most barriers to the flow of capital and international direct investment have been removed.224 billion from only $792. and investment of up to 100% of equity participation is allowed in most sectors. whereas it was $108. . Pakistan has been able to attract a large portion of the global private equity investments because of economic reforms initiated in 2003 that have provided foreign investors with greater assurances for the stability of the nation and their ability to repatriate invested funds in the future. and investment Investment Foreign direct investment (FDI) in Pakistan soared by 180. with most of the banking system privately owned.