Pakistan has been facing issues of underdevelopment for many decades due to internal political disputes and low foreign investment. Despite having a large English-speaking population, English language proficiency is not widespread, especially in rural areas. The security environment, electricity shortages, and a challenging investment climate have traditionally deterred investors, but there have been some recent improvements in security and energy. Agriculture is a crucial sector in Pakistan, contributing to 20% of the country's output and providing employment to 40% of the workforce. Textiles and apparel exports generate over half of Pakistan's export earnings, but the lack of diversification in exports makes the country vulnerable to shifts in global demand.
Pakistan's GDP growth has gradually increased since 2012 and reached 5.3% in 2017. The official unemployment rate was 6% in 2017, but this does not accurately reflect the situation as much of the economy is informal and underemployment remains high. Human development in Pakistan lags behind most of the region. In 2013, Pakistan started a $6.3 billion IMF Extended Fund Facility to reduce energy shortages, stabilize public finances, increase revenue collection, and improve its balance of payments position. The program concluded in 2016 and although Pakistan missed some structural reform criteria, it did restore macroeconomic stability, improve its credit rating, and boost growth. The Pakistani rupee has been relatively stable against the US dollar since 2015, but declined by around 10% between November 2017 and March 2018. Balance of payments concerns have reemerged due to a significant increase in imports and weak export and remittance growth.
To further develop, Pakistan must address long-standing issues such as expanding investment in education, healthcare, and sanitation, adapting to the effects of climate change and natural disasters, improving the country's business environment, and broadening the country's tax base. With a growing and rapidly urbanizing population, much of which is under the age of 25, Pakistan's leadership will be pressed to implement economic reforms, develop the energy sector, and attract foreign investment to support sufficient economic growth and employment.
In an effort to boost development, Pakistan and China are implementing the "China-Pakistan Economic Corridor" (CPEC) with $60 billion in investments towards energy and infrastructure projects. Pakistan believes that CPEC investments will enable growth rates of over 6% of GDP and lay the groundwork for increased exports. However, CPEC-related obligations have raised IMF concerns about Pakistan's capital outflows and external financing needs over the medium term. To sustain development and ensure economic growth, Pakistan must address these concerns and continue to implement economic reforms to attract foreign investment and support its growing population.
restrictions. However, GDP growth turned positive in 2017 as oil prices recovered and output stabilized.