2023 Index of Economic Freedom

Pakistan

OVERALL SCORE49.4
WORLD RANK152
Rule of Law

Property Rights29.0

Judicial Effectiveness29.6

Government Integrity26.8

Government Size

Tax Burden78.3

Government Spending88.9

Fiscal Health11.4

Regulatory Efficiency

Business Freedom45.9

Labor Freedom51.6

Monetary Freedom65.8

Open Markets

Trade Freedom65.8

Investment Freedom60.0

Financial Freedom40.0

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Quick Facts
  • Population:
    • 225.2 million
  • GDP (PPP):
    • $1.3 trillion
    • 3.7% 5-year compound annual growth
    • $5,973 per capita
  • Unemployment:
    • 4.8%
  • Inflation (CPI):
    • 8.9%
  • FDI Inflow:
  • Public Debt:
    • 74.9%

Pakistan’s economic freedom score is 49.4, making its economy the 152nd freest in the 2023 Index. Its score is 0.6 point higher than last year. Pakistan is ranked 33rd out of 39 countries in the Asia–Pacific region, and its overall score is below the world and regional averages.

The government has demonstrated little commitment to much-needed economic reform. Efforts in key areas have been marginal at best. Measures to strengthen the management of public finance and reform outmoded economic structures have met institutional resistance. Property rights are undercut by a judiciary that is susceptible to political interference and corruption.

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Background

Civilian authorities are subservient to the military, and Islamist extremist groups are sanctioned by the state. Shehbaz Sharif became prime minister in 2022. Tensions between India and Pakistan over the disputed territory of Kashmir persist, and domestic terrorism has surged since the Taliban regained power in Afghanistan. Political and social instability hinder economic development, and Pakistan is heavily indebted to foreign lenders, including China. In 2022, devastating floods caused over $10 billion in damage and affected more than 30 million Pakistanis. Textiles and apparel account for most export earnings, but much of the economy is informal, and underemployment is high.

Rule of Law

Property Rights 29.0 Create a Graph using this measurement

Judicial Effectiveness 29.6 Create a Graph using this measurement

Government Integrity 26.8 Create a Graph using this measurement

The overall rule of law is weak in Pakistan. The country’s property rights score is below the world average; its judicial effectiveness score is below the world average; and its government integrity score is below the world average.

Government Size

The top individual and corporate tax rates are, respectively, 35 percent and 29 percent. The tax burden equals 10.4 percent of GDP. Three-year government spending and budget balance averages are, respectively, 19.3 percent and –7.0 percent of GDP. Public debt equals 74.9 percent of GDP.

Regulatory Efficiency

Little progress has been made in improving either the overall entrepreneurial environment or private-sector dynamism. The labor market remains stagnant. Much of the workforce is underemployed in the informal sector. Inflation has been quite high, disrupting monetary stability.

Open Markets

The trade-weighted average tariff rate is 9.6 percent. State involvement in the economy and restrictions on foreign investment are serious drags on economic dynamism. The financial sector remains underdeveloped, and foreign participation is limited. Financial inclusion is low.

Country's Score Over Time

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Regional Ranking

RANK COUNTRY OVERALL CHANGE
1Singapore83.9-0.5
2Taiwan80.70.6
3New Zealand78.9-1.7
4Australia74.8-2.9
5South Korea73.7-0.9
6Japan69.3-0.6
7Samoa68.30.0
8Malaysia67.3-0.8
9Brunei Darussalam65.70.9
10Indonesia63.5-0.9
11Micronesia62.61.6
12Vanuatu62.1-0.8
13Kazakhstan62.1-2.3
14Vietnam61.81.2
15Mongolia61.7-2.2
16Thailand60.6-2.6
17Tonga60-0.8
18Philippines59.3-1.8
19Bhutan59-0.3
20Kiribati58.8-0.4
21Fiji581.6
22Solomon Islands56.90.4
23Uzbekistan56.50.8
24Cambodia56.5-0.6
25Kyrgyz Republic55.80.0
26Bangladesh54.41.7
27India52.9-1.0
28Sri Lanka52.2-1.1
29Papua New Guinea51.7-2.9
30Nepal51.41.7
31Tajikistan50.60.9
32Laos50.31.1
33Pakistan49.40.6
34China48.30.3
35Timor-Leste47.20.9
36Maldives46.6-0.7
37Turkmenistan46.50.3
38Burma46.5-3.1
39North Korea2.9-0.1
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