The Pakistani economy experienced varying levels of growth and challenges across different decades since independence in 1947. The 1960s under Ayub Khan saw the best performance with average GDP growth of 6.8% annually and a diversification away from agriculture towards industry and services. However, the 1970s were marked by political instability following the loss of East Pakistan and economic policies like nationalization that led to declining growth. The decades of the 1980s under Zia-ul-Haq and 2000s under Musharraf saw periods of economic liberalization, stabilization, and higher average growth rates of 7.1% and 4.9% respectively.

1. 2. Decade-Wise Performance of Pakistan
Economy
Laying Foundation (1947-58)
The First Democratic Era
 Newly independent nation, with little industry, few services and
no manufacture Small Base
 Could not Perform Well
 Composition of GNP heavy reliance on agriculture
 Windfall gain made by the mercantile class during and after the
Korean War (1952).
 Industrial growth was 23 percent per annum in the first period
(1955-60)
 Growth of agriculture sector was poor throughout 1950s
Food Grain Shortage
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2. 2. Decade-Wise Performance of Pakistan Economy
 In late fifties government focus on agriculture sector
emerge Rapid growth in agriculture sector
 Provision of necessities to newly migrated people from
Indian side was big issue
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3. Decade-Wise Performance of Pakistan Economy
The Decade of Development: 1958-1968
The First Military Government: Ayub Khan’s Era
 Period of sound and Disciplined Economic
Management ------ Strong planning and formal decision-
making machinery
 The 1960s stands out as the decade with best performance
 GDP growth rate was 6.8 percent on average per annum
 Composition of GNP changed substantially
 The share of Agriculture declined
 Industry increased ( Doubled)
 Construction, electricity/gas, services sector increased
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4. Decade-Wise Performance of Pakistan Economy
 Post 1965 war
 Mark decrease in foreign loans inflow
 Slow down in industrial growth
 Increase in defense expenditure
 Capitalist Economy - Private Sector Play Significant Role
 Controversial Decade for the type of economic policy pursued
 Income inequality 5 million people fell below the poverty line.
 Exchange rate was overvalued
 Industrial Bias
 Neglect of social sector
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5. Decade-Wise Performance of Pakistan Economy
The Bad Luck years: 1971-77
The Second Democratic Government: Zulfiqar Ali Bhutto Era
Political Instability (Partition of East Pakistan)
Restricted Economic Policies (Nationalization)
Major cause of abrupt decline in Economic Growth
Deindustrialization
Low Production
 Inflation ( 12.2 %) ---- high oil prices, increase in remittances,
enhanced public consumption, decreased production output
 Unemployment
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6. 2. Decade-Wise Performance of Pakistan
Economy
 Reforms in early 1970s
 Land reforms
 Labor reforms
 Nationalization of key industries, banks and insurance
companies
• Percentage share of manufacturing and agriculture declined
• Growth of agriculture sector slow down --- 5.6 percent in 1965-70 to
2.48 percent
• The decline in both major sectors ----- decline GDP growth to 3.6
percent
• Low public saving 7.6 % of GDP on average
• Current account balance 5.2 % of GDP on average
• Massive devaluation of 131 % in 1972
• Massive migration of workers to Middle East 6

7. 2. Decade-Wise Performance of Pakistan
Economy
The Decade of Economic Growth: 1977-88
The Second Military Government: Zia Ul Haq’s Era
Key Features
 Denationalization
 Deregulation ( deregulation of interest rate)
 Liberalization ( import liberalization, reduction in tariff)
 Agreement ( Structural Adjustment Loan) with World Bank
 Exchange Rate Policy was revised in 1982
 Mange Float System was adopted ------Pak rupee depreciated by 20 %
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8. Decade-Wise Performance of Pakistan Economy
The Decade of Economic Growth: 1977-88
The Second Military Government: Zia Ul Haq’s Era
Performances
 Average growth of GDP was 7.1 percent
 Fiscal deficit was 3.5 % on average
 The inflation rate was 7.6 percent on average compared to 12.2 %
in 1970s
 The current account deficit was 2.8 percent of GDP on average
 Investment to GDP ratio was 18.7 % of GDP
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9. Decade-Wise Performance of Pakistan Economy
The Third Democratic Era (1988–1999)
Key Features
 Denationalization
 Deregulation ( deregulation of interest rate)
 Liberalization
 Reduction of both tariff and non tariff barriers
 All sectors were opened for foreign investors
Can't Attract inflow of foreign capital-------Poor law and order
condition, inadequate infrastructure facilities, and inconsistent
policies
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10. Decade-Wise Performance of Pakistan Economy
The Third Democratic Era (1988–1999)
Performances
 Average GDP growth rate was 4.4 %
 Budget deficit was 7.3 % of GDP on average
 Current account deficit was 4.1% of GDP on average
 Investment to GDP ratio was 18.3 % of GDP on average
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11. Decade-Wise Performance of Pakistan Economy
The Third Military Era (1999-2007): General Pervez
Musharraf
Features
 Liberalization
 Privatization ( Mainly focus on banking, telecommunication
 Deregulation
 Restructuring of Financial Sector
Market Led Economy
 Foreign Exchange Regime
 Macroeconomic Stability Boosting Investor Confidence
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12. Decade-Wise Performance of Pakistan Economy
September 11, 2001 Event
Fighting against terrorism
 Rescheduling of 12 $ billion of bilateral and multilateral
external debts
 Result of $1.5 billion annual relief in shape of decrease debt
servicing charges
 Provision of handsome foreign grants ( 1$ to $1.5 billion)
 Greater access to the markets of USA and EU ----
significant increase in exports
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13. Decade-Wise Performance of Pakistan Economy
Performances
 GDP growth was 4.9 % on average
 Fiscal deficit was about 4.5% of GDP
 The current account was surplus ( average 1.9% of the GDP)
 Export 18.4% of GDP per annum
 Public debt to GDP ratio declined from 102.8% in 2000 to 74.6
% in 2005
 Inflation rate was 5.7% on average per annum
 Record investment 17.3% of GDP
 Saving rate was 17.8% of GDP on average
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