Economy of Pakistan - Key Concepts & Data

Pakistan's Economy - Exam Essentials

Economic questions feature prominently in CSS, PMS, and all commission exams. Understanding Pakistan's economic framework, challenges, and reforms is critical.

1. Economic Structure

• GDP Composition (approx.): Agriculture 22%, Industry 20%, Services 58%
• Labor Force: Agriculture employs ~38% of workforce
• Currency: Pakistani Rupee (PKR)
• Central Bank: State Bank of Pakistan (SBP), established 1948
• Fiscal Year: July 1 to June 30

2. Key Economic Institutions

• State Bank of Pakistan (SBP) - Monetary policy, currency management
• Securities and Exchange Commission (SECP) - Capital market regulation
• FBR (Federal Board of Revenue) - Tax collection
• Planning Commission - Economic planning and development
• Pakistan Stock Exchange (PSX) - Stock market (merged KSE, LSE, ISE in 2016)

3. Major Economic Challenges

• Fiscal deficit - Government spending exceeds revenue
• Low tax-to-GDP ratio - Among the lowest in the region
• Trade deficit - Imports significantly exceed exports
• Energy crisis - Power shortages affect industrial production
• Inflation - Rising cost of living and food prices
• Circular debt - Accumulated debt in the energy sector

4. International Economic Relations

• CPEC (China-Pakistan Economic Corridor) - Part of China's Belt and Road Initiative, $62+ billion investment
• IMF Programs - Multiple bailout programs for balance of payments support
• Remittances - Major source of foreign exchange (~$30 billion annually)
• Major Trading Partners: China, UAE, Saudi Arabia, USA, EU

5. Key Economic Concepts for Exams

• GDP vs GNP - GDP measures domestic production, GNP includes overseas income
• Monetary vs Fiscal Policy - SBP controls monetary, government controls fiscal
• Balance of Payments - Current account + capital account + financial account
• Inflation Types - Demand-pull, cost-push, built-in inflation

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Key Points

• Services sector contributes ~58% to GDP
• SBP established in 1948 manages monetary policy
• CPEC is a key economic corridor worth $62+ billion
• Remittances are a major foreign exchange source
• Low tax-to-GDP ratio is a persistent challenge

Preparation Tips

• Keep track of latest Economic Survey data
• Know the current SBP governor and key policy rates
• Study CPEC projects and their status
• Follow Dawn Business section for current economic developments