Report by the WTO Secretariat

Since Pakistan’s previous Trade Policy Review in 2015, efforts for improving economic fundamentals and strengthening macroeconomic resilience have been undertaken. Pakistan was able to weather the COVID-19 pandemic comparatively well, supported by a proactive and comprehensive set of economic policies and other support measures. During the review period, Pakistan’s annual GDP growth on a market price basis peaked at 5.8% (2017/18), and declined to -0.9% (2019/20), due to the COVID-19 outbreak. It has since bounced back to an estimated 4.7% in 2020/21 as a result of the timely adopted support measures. Pakistan’s GDP annual average growth rate for the period 2014/15-20/21 stood at 3.8%, a slight rise compared to previous performances (averaging 3.2% in 2007/08-13/14). Following an episode of external and fiscal imbalances, on 3 July 2019 Pakistan entered a 39-month IMF Extended Fund Facility (EFF) involving adjustment measures, including fiscal consolidation; in light of the COVID-19 incidence, the EFF was temporarily put on hold in March 2020. Developments in Pakistan’s competitiveness position in the world reflect those of labour productivity growth and, in particular, total factor productivity growth, but also weaknesses in several areas where reforms have been under way. Inflation peaked at 10.7% in 2019/20 before slightly dropping to 8.9% in 2020/21, almost twice its 2014/15 level; the unemployment rate increased from 5.8% in 2017/18 to 6.9% (2018/19) and then seemingly rose further, reflecting concerns over a low GDP growth rate and the impact of the pandemic.