Home

Afghanistan vs. Pakistan

Economy

AfghanistanPakistan
Economy - overview

Prior to 2001, Afghanistan was an extremely poor, landlocked, and foreign aid-dependent country. Increased domestic economic activity occurred following the US-led invasion, as well as significant international economic development assistance. This increased activity expanded access to water, electricity, sanitation, education, and health services, and fostered consistent growth in government revenues since 2014. While international security forces have been drawing down since 2012, with much higher U.S. forces’ drawdowns occurring since 2017, economic progress continues, albeit uneven across sectors and key economic indicators. After recovering from the 2018 drought and growing 3.9% in 2019, political instability, expiring international financial commitments, and the COVID-19 pandemic have wrought significant adversity on the Afghan economy, with a projected 5% contraction.

Current political parties’ power-sharing agreement following the September 2019 presidential elections as well as ongoing Taliban attacks and peace talks have led to Afghan economic instability. This instability, coupled with expiring international grant and assistance, endangers recent fiscal gains and has led to more internally displaced persons. In November 2020, Afghanistan secured $12 billion in additional international aid for 2021-2025, much of which is conditional upon Taliban peace progress. Additionally, Afghanistan continues to experience influxes of repatriating Afghanis, mostly from Iran, significantly straining economic and security institutions.

Afghanistan’s trade deficit remains at approximately 31% of GDP and is highly dependent on financing through grants and aid. While Afghan agricultural growth remains consistent, recent industrial and services growth have been enormously impacted by COVID-19 lockdowns and trade cessations. While trade with the People’s Republic of China has rapidly expanded in recent years, Afghanistan still relies heavily upon India and Pakistan as export partners but is more diverse in its import partners. Furthermore, Afghanistan still struggles to effectively enforce business contracts, facilitate easy tax collection, and enable greater international trade for domestic enterprises.

Current Afghan priorities focus on the following goals:

  • Securing international economic agreements, many of which are contingent on Taliban peace progress;
  • Increasing exports to $2 billion USD by 2023;
  • Continuing to expand government revenue collection;
  • Countering corruption and navigating challenges from the power-sharing agreement; and
  • Developing a strong private sector that can empower the economy.

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.

GDP (purchasing power parity)$78.557 billion (2019 est.)

$75.6 billion (2018 est.)

$74.711 billion (2017 est.)

note: data are in 2017 dollars
$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
GDP - real growth rate2.7% (2017 est.)

2.2% (2016 est.)

1% (2015 est.)
5.4% (2017 est.)

4.6% (2016 est.)

4.1% (2015 est.)

note: data are for fiscal years
GDP - per capita (PPP)$2,065 (2019 est.)

$2,034 (2018 est.)

$2,058 (2017 est.)

note: data are in 2017 dollars
$4,690 (2019 est.)

$4,740 (2018 est.)

$4,571 (2017 est.)

note: data are in 2010 dollars
GDP - composition by sectoragriculture: 23% (2016 est.)

industry: 21.1% (2016 est.)

services: 55.9% (2016 est.)

note: data exclude opium production
agriculture: 24.4% (2016 est.)

industry: 19.1% (2016 est.)

services: 56.5% (2017 est.)
Population below poverty line54.5% (2016 est.)24.3% (2015 est.)
Household income or consumption by percentage sharelowest 10%: 3.8%

highest 10%: 24% (2008)
lowest 10%: 4%

highest 10%: 26.1% (FY2013)
Inflation rate (consumer prices)5% (2017 est.)

4.4% (2016 est.)
9.3% (2019 est.)

5.2% (2018 est.)

4.2% (2017 est.)
Labor force8.478 million (2017 est.)61.71 million (2017 est.)

note: extensive export of labor, mostly to the Middle East, and use of child labor
Labor force - by occupationagriculture: 44.3%

industry: 18.1%

services: 37.6% (2017 est.)
agriculture: 42.3%

industry: 22.6%

services: 35.1% (FY2015 est.)
Unemployment rate23.9% (2017 est.)

22.6% (2016 est.)
6% (2017 est.)

6% (2016 est.)

note: Pakistan has substantial underemployment
Distribution of family income - Gini index29.4 (2008)33.5 (2015 est.)

30.9 (FY2011)
Budgetrevenues: 2.276 billion (2017 est.)

expenditures: 5.328 billion (2017 est.)
revenues: 46.81 billion (2017 est.)

expenditures: 64.49 billion (2017 est.)

note: data are for fiscal years
Industriessmall-scale production of bricks, textiles, soap, furniture, shoes, fertilizer, apparel, food products, non-alcoholic beverages, mineral water, cement; handwoven carpets; natural gas, coal, coppertextiles and apparel, food processing, pharmaceuticals, surgical instruments, construction materials, paper products, fertilizer, shrimp
Industrial production growth rate-1.9% (2016 est.)5.4% (2017 est.)
Agriculture - productswheat, milk, grapes, vegetables, potatoes, watermelons, melons, rice, onions, applessugar cane, buffalo milk, wheat, milk, rice, maize, potatoes, cotton, fruit, mangoes/guavas
Exports$784 million (2017 est.)

$614.2 million (2016 est.)

note: not including illicit exports or reexports
$31.517 billion (2019 est.)

$27.604 billion (2018 est.)

$25.613 billion (2017 est.)
Exports - commoditiesgold, grapes, opium, fruits and nuts, insect resins, cotton, handwoven carpets, soapstone, scrap metal (2019)textiles, clothing and apparel, rice, leather goods, surgical instruments (2019)
Exports - partnersUnited Arab Emirates 45%, Pakistan 24%, India 22%, China 1% (2019)United States 14%, China 8%, Germany 7%, United Kingdom 6% (2019)
Imports$7.616 billion (2017 est.)

$6.16 billion (2016 est.)
$42.27 billion (2019 est.)

$51.602 billion (2018 est.)

$47.165 billion (2017 est.)
Imports - commoditieswheat flours, broadcasting equipment, refined petroleum, rolled tobacco, aircraft parts, synthetic fabrics (2019)refined petroleum, crude petroleum, natural gas, palm oil, scrap iron (2019)
Imports - partnersUnited Arab Emirates 23%, Pakistan 17%, India 13%, China 9%, United States 9%, Uzbekistan 7%, Kazakhstan 6% (2019)China 28%, United Arab Emirates 11%, United States 5% (2019)
Debt - external$284 million (FY10/11)$107.527 billion (2019 est.)

$95.671 billion (2018 est.)
Exchange ratesafghanis (AFA) per US dollar -

7.87 (2017 est.)

68.03 (2016 est.)

67.87 (2015)

61.14 (2014 est.)

57.25 (2013 est.)
Pakistani 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.)
Fiscal year21 December - 20 December1 July - 30 June
Public debt7% of GDP (2017 est.)

7.8% of GDP (2016 est.)
67% of GDP (2017 est.)

67.6% of GDP (2016 est.)
Reserves of foreign exchange and gold$7.187 billion (31 December 2017 est.)

$6.901 billion (31 December 2015 est.)
$18.46 billion (31 December 2017 est.)

$22.05 billion (31 December 2016 est.)
Current Account Balance$1.014 billion (2017 est.)

$1.409 billion (2016 est.)
-$7.143 billion (2019 est.)

-$19.482 billion (2018 est.)
GDP (official exchange rate)$20.24 billion (2017 est.)$253.183 billion (2019 est.)
Taxes and other revenues11.2% (of GDP) (2017 est.)15.4% (of GDP) (2017 est.)
Budget surplus (+) or deficit (-)-15.1% (of GDP) (2017 est.)-5.8% (of GDP) (2017 est.)
Unemployment, youth ages 15-24total: 17.6%

male: 16.3%

female: 21.4% (2017)
total: 7.8%

male: 8.2%

female: 6.8% (2018 est.)
GDP - composition, by end usehousehold consumption: 81.6% (2016 est.)

government consumption: 12% (2016 est.)

investment in fixed capital: 17.2% (2016 est.)

investment in inventories: 30% (2016 est.)

exports of goods and services: 6.7% (2016 est.)

imports of goods and services: -47.6% (2016 est.)
household 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.)
Gross national saving22.7% of GDP (2017 est.)

25.8% of GDP (2016 est.)

21.4% of GDP (2015 est.)
12.3% of GDP (2019 est.)

12.2% of GDP (2018 est.)

13% of GDP (2017 est.)

note: data are for fiscal years

Source: CIA Factbook