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Pakistan vs. India

Economy

PakistanIndia
Economy - overview

Decades of internal political disputes and low levels of foreign investment have led to underdevelopment in Pakistan. Pakistan has a large English-speaking population, with English-language skills less prevalent outside urban centers. Despite some progress in recent years in both security and energy, a challenging security environment, electricity shortages, and a burdensome investment climate have traditionally deterred investors. Agriculture accounts for one-fifth of output and two-fifths of employment. Textiles and apparel account for more than half of Pakistan's export earnings; Pakistan's failure to diversify its exports has left the country vulnerable to shifts in world demand. Pakistan's GDP growth has gradually increased since 2012, and was 5.3% in 2017. Official unemployment was 6% in 2017, but this fails to capture the true picture, because much of the economy is informal and underemployment remains high. Human development continues to lag behind most of the region.

In 2013, Pakistan embarked on a $6.3 billion IMF Extended Fund Facility, which focused on reducing energy shortages, stabilizing public finances, increasing revenue collection, and improving its balance of payments position. The program concluded in September 2016. Although Pakistan missed several structural reform criteria, it restored macroeconomic stability, improved its credit rating, and boosted growth. The Pakistani rupee has remained relatively stable against the US dollar since 2015, though it declined about 10% between November 2017 and March 2018. Balance of payments concerns have reemerged, however, as a result of a significant increase in imports and weak export and remittance growth.

Pakistan must continue to address several longstanding issues, including expanding investment in education, healthcare, and sanitation; adapting to the effects of climate change and natural disasters; improving the country's business environment; and widening the country's tax base. Given demographic challenges, Pakistan's leadership will be pressed to implement economic reforms, promote further development of the energy sector, and attract foreign investment to support sufficient economic growth necessary to employ its growing and rapidly urbanizing population, much of which is under the age of 25.

In an effort to boost development, Pakistan and China are implementing the "China-Pakistan Economic Corridor" (CPEC) with $60 billion in investments targeted towards energy and other infrastructure projects. Pakistan believes CPEC investments will enable growth rates of over 6% of GDP by laying the groundwork for increased exports. CPEC-related obligations, however, have raised IMF concern about Pakistan's capital outflows and external financing needs over the medium term.

India's diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services. Slightly less than half of the workforce is in agriculture, but services are the major source of economic growth, accounting for nearly two-thirds of India's output but employing less than one-third of its labor force. India has capitalized on its large educated English-speaking population to become a major exporter of information technology services, business outsourcing services, and software workers. Nevertheless, per capita income remains below the world average. India is developing into an open-market economy, yet traces of its past autarkic policies remain. Economic liberalization measures, including industrial deregulation, privatization of state-owned enterprises, and reduced controls on foreign trade and investment, began in the early 1990s and served to accelerate the country's growth, which averaged nearly 7% per year from 1997 to 2017.

India's economic growth slowed in 2011 because of a decline in investment caused by high interest rates, rising inflation, and investor pessimism about the government's commitment to further economic reforms and about slow world growth. Investors' perceptions of India improved in early 2014, due to a reduction of the current account deficit and expectations of post-election economic reform, resulting in a surge of inbound capital flows and stabilization of the rupee. Growth rebounded in 2014 through 2016. Despite a high growth rate compared to the rest of the world, India's government-owned banks faced mounting bad debt, resulting in low credit growth. Rising macroeconomic imbalances in India and improving economic conditions in Western countries led investors to shift capital away from India, prompting a sharp depreciation of the rupee through 2016.

The economy slowed again in 2017, due to shocks of "demonetizaton" in 2016 and introduction of GST in 2017. Since the election, the government has passed an important goods and services tax bill and raised foreign direct investment caps in some sectors, but most economic reforms have focused on administrative and governance changes, largely because the ruling party remains a minority in India's upper house of Parliament, which must approve most bills.

India has a young population and corresponding low dependency ratio, healthy savings and investment rates, and is increasing integration into the global economy. However, long-term challenges remain significant, including: India's discrimination against women and girls, an inefficient power generation and distribution system, ineffective enforcement of intellectual property rights, decades-long civil litigation dockets, inadequate transport and agricultural infrastructure, limited non-agricultural employment opportunities, high spending and poorly targeted subsidies, inadequate availability of quality basic and higher education, and accommodating rural-to-urban migration.

GDP (purchasing power parity)$1,015,796,000,000 (2019 est.)

$1,005,850,000,000 (2018 est.)

$950.381 billion (2017 est.)

note: data are in 2017 dollars
data are for fiscal years
$9,155,083,000,000 (2019 est.)

$8,787,694,000,000 (2018 est.)

$8,280,935,000,000 (2017 est.)

note: data are in 2010 dollars
GDP - real growth rate5.4% (2017 est.)

4.6% (2016 est.)

4.1% (2015 est.)

note: data are for fiscal years
4.86% (2019 est.)

6.78% (2018 est.)

6.55% (2017 est.)
GDP - per capita (PPP)$4,690 (2019 est.)

$4,740 (2018 est.)

$4,571 (2017 est.)

note: data are in 2010 dollars
$6,700 (2019 est.)

$6,497 (2018 est.)

$6,186 (2017 est.)

note: data are in 2010 dollars
GDP - composition by sectoragriculture: 24.4% (2016 est.)

industry: 19.1% (2016 est.)

services: 56.5% (2017 est.)
agriculture: 15.4% (2016 est.)

industry: 23% (2016 est.)

services: 61.5% (2016 est.)
Population below poverty line24.3% (2015 est.)21.9% (2011 est.)
Household income or consumption by percentage sharelowest 10%: 4%

highest 10%: 26.1% (FY2013)
lowest 10%: 3.6%

highest 10%: 29.8% (2011)
Inflation rate (consumer prices)9.3% (2019 est.)

5.2% (2018 est.)

4.2% (2017 est.)
3.7% (2019 est.)

3.9% (2018 est.)

3.3% (2017 est.)
Labor force61.71 million (2017 est.)

note: extensive export of labor, mostly to the Middle East, and use of child labor
521.9 million (2017 est.)
Labor force - by occupationagriculture: 42.3%

industry: 22.6%

services: 35.1% (FY2015 est.)
agriculture: 47%

industry: 22%

services: 31% (FY 2014 est.)
Unemployment rate6% (2017 est.)

6% (2016 est.)

note: Pakistan has substantial underemployment
8.5% (2017 est.)

8.5% (2016 est.)
Distribution of family income - Gini index33.5 (2015 est.)

30.9 (FY2011)
35.7 (2011 est.)

37.8 (1997)
Budgetrevenues: 46.81 billion (2017 est.)

expenditures: 64.49 billion (2017 est.)

note: data are for fiscal years
revenues: 238.2 billion (2017 est.)

expenditures: 329 billion (2017 est.)
Industriestextiles and apparel, food processing, pharmaceuticals, surgical instruments, construction materials, paper products, fertilizer, shrimptextiles, chemicals, food processing, steel, transportation equipment, cement, mining, petroleum, machinery, software, pharmaceuticals
Industrial production growth rate5.4% (2017 est.)5.5% (2017 est.)
Agriculture - productssugar cane, buffalo milk, wheat, milk, rice, maize, potatoes, cotton, fruit, mangoes/guavassugar cane, rice, wheat, buffalo milk, milk, potatoes, vegetables, bananas, maize, mangoes/guavas
Exports$31.517 billion (2019 est.)

$27.604 billion (2018 est.)

$25.613 billion (2017 est.)
$572.073 billion (2019 est.)

$564.165 billion (2018 est.)

$509.661 billion (2017 est.)
Exports - commoditiestextiles, clothing and apparel, rice, leather goods, surgical instruments (2019)refined petroleum, diamonds, packaged medicines, jewelry, cars (2019)
Exports - partnersUnited States 14%, China 8%, Germany 7%, United Kingdom 6% (2019)United States 17%, United Arab Emirates 9%, China 5% (2019)
Imports$42.27 billion (2019 est.)

$51.602 billion (2018 est.)

$47.165 billion (2017 est.)
$624.314 billion (2019 est.)

$656.529 billion (2018 est.)

$575.121 billion (2017 est.)
Imports - commoditiesrefined petroleum, crude petroleum, natural gas, palm oil, scrap iron (2019)crude petroleum, gold, coal, diamonds, natural gas (2019)
Imports - partnersChina 28%, United Arab Emirates 11%, United States 5% (2019)China 15%, United States 7%, United Arab Emirates 6%, Saudi Arabia 5% (2019)
Debt - external$107.527 billion (2019 est.)

$95.671 billion (2018 est.)
$555.388 billion (2019 est.)

$518.34 billion (2018 est.)
Exchange ratesPakistani rupees (PKR) per US dollar -

160.425 (2020 est.)

155.04 (2019 est.)

138.8 (2018 est.)

102.769 (2014 est.)

101.1 (2013 est.)
Indian rupees (INR) per US dollar -

73.565 (2020 est.)

71.05 (2019 est.)

70.7675 (2018 est.)

64.152 (2014 est.)

61.03 (2013 est.)
Fiscal year1 July - 30 June1 April - 31 March
Public debt67% of GDP (2017 est.)

67.6% of GDP (2016 est.)
71.2% of GDP (2017 est.)

69.5% of GDP (2016 est.)

note: data cover central government debt, and exclude debt instruments issued (or owned) by government entities other than the treasury; the data include treasury debt held by foreign entities; the data exclude debt issued by subnational entities, as well as intragovernmental debt; intragovernmental debt consists of treasury borrowings from surpluses in the social funds, such as for retirement, medical care, and unemployment; debt instruments for the social funds are not sold at public auctions
Reserves of foreign exchange and gold$18.46 billion (31 December 2017 est.)

$22.05 billion (31 December 2016 est.)
$409.8 billion (31 December 2017 est.)

$359.7 billion (31 December 2016 est.)
Current Account Balance-$7.143 billion (2019 est.)

-$19.482 billion (2018 est.)
-$29.748 billion (2019 est.)

-$65.939 billion (2018 est.)
GDP (official exchange rate)$253.183 billion (2019 est.)$2,835,927,000,000 (2019 est.)
Credit ratingsFitch rating: B- (2018)

Moody's rating: B3 (2015)

Standard & Poors rating: B- (2019)
Fitch rating: BBB- (2006)

Moody's rating: Baa3 (2020)

Standard & Poors rating: BBB- (2007)
Ease of Doing Business Index scoresOverall score: 61 (2020)

Starting a Business score: 89.3 (2020)

Trading score: 68.8 (2020)

Enforcement score: 43.5 (2020)
Overall score: 71 (2020)

Starting a Business score: 81.6 (2020)

Trading score: 82.5 (2020)

Enforcement score: 41.2 (2020)
Taxes and other revenues15.4% (of GDP) (2017 est.)9.2% (of GDP) (2017 est.)
Budget surplus (+) or deficit (-)-5.8% (of GDP) (2017 est.)-3.5% (of GDP) (2017 est.)
Unemployment, youth ages 15-24total: 7.8%

male: 8.2%

female: 6.8% (2018 est.)
total: 22.3%

male: 21.9%

female: 23.8% (2019 est.)
GDP - composition, by end usehousehold consumption: 82% (2017 est.)

government consumption: 11.3% (2017 est.)

investment in fixed capital: 14.5% (2017 est.)

investment in inventories: 1.6% (2017 est.)

exports of goods and services: 8.2% (2017 est.)

imports of goods and services: -17.6% (2017 est.)
household consumption: 59.1% (2017 est.)

government consumption: 11.5% (2017 est.)

investment in fixed capital: 28.5% (2017 est.)

investment in inventories: 3.9% (2017 est.)

exports of goods and services: 19.1% (2017 est.)

imports of goods and services: -22% (2017 est.)
Gross national saving12.3% of GDP (2019 est.)

12.2% of GDP (2018 est.)

13% of GDP (2017 est.)

note: data are for fiscal years
29.1% of GDP (2019 est.)

31.1% of GDP (2018 est.)

31.4% of GDP (2017 est.)

Source: CIA Factbook