In recent years, Pakistan has experienced a significant shift in its economic landscape, especially in the realm of services trade. Traditionally reliant on agriculture and manufacturing as the primary drivers of its economy, the country is now witnessing a remarkable transformation with the services sector taking the lead. This change is primarily driven by the rapid advancements in technology and a young, tech-savvy population that is increasingly embracing digital entrepreneurship and freelancing.
According to data released by the Pakistan Bureau of Statistics (PBS), the country’s export of services witnessed a notable growth during the first quarter of the current financial year. The export of services increased by 5.77% compared to the same period last year. In monetary terms, this translates to a net addition of USD 104 million, with exports growing from $1.802 billion in July-September FY2023-24 to $1.906 billion in the corresponding period of FY2024-25. This year-on-year increase of approximately 5.8% highlights the sector’s growing importance to Pakistan’s economic portfolio.
Conversely, the import of services during this period showed a decline, decreasing by 3.35% to $2.605 billion compared to $2.695 billion in the previous year. This reduction in service imports is a positive indicator, reflecting the country’s growing self-reliance and the increasing capacity of its domestic services industry to meet local demand. The shrinking imports, combined with rising exports, contributed to a significant reduction in the trade deficit within the services sector. PBS data revealed that the services trade deficit decreased by 21.77% in the first quarter of FY2024-25 compared to the same period last year. The deficit narrowed from $893 million to $698.85 million, which is a promising sign for Pakistan’s balance of payments.
A major factor behind this growth is the expanding digital economy. Pakistan is steadily emerging as a key player on the global outsourcing stage, driven by a surge in startups and established companies offering software development, digital marketing, and IT consulting services. This shift is supported by the country’s young workforce, many of whom are leveraging their technological skills to tap into global markets. The growth of the freelance economy in Pakistan has been particularly significant, with more people providing services through global platforms like Upwork and Fiverr. This has enabled Pakistan to become one of the fastest-growing freelance markets in the world, creating new opportunities for income generation and skill development.
In addition to IT and digital services, other sectors like tourism, education, and healthcare are also gaining traction. The government’s recent initiatives to promote tourism, coupled with the increasing popularity of telemedicine and online education, are contributing to the diversification of the services sector. This diversification not only strengthens the economy but also creates new employment opportunities, especially for the country’s educated youth.
A closer look at the data for September 2024 shows further encouraging trends. On a year-on-year basis, the export of services in September rose by 17.04%, increasing to $656.99 million from $561.36 million in September 2023. Meanwhile, imports during the same month fell by 3.99%, declining from $918.91 million to $882.23 million. Additionally, exports in September 2024 saw a sequential increase of 6.55% compared to August 2024, reaching $656.99 million, while imports declined by 1.95% month-on-month, from $899.76 million in August to $882.23 million in September.
Extending the analysis to the four-month period from July to October of FY2024-25, Pakistan’s total exports, including goods and services, reached $10.880 billion, marking a significant increase from $9.590 billion during the same period in the previous fiscal year. On the import side, the country also saw an uptick, with imports growing by 5.17% from $16.977 billion to $17.854 billion during the same period. Despite the rise in imports, the overall trade deficit for these months showed an improvement, decreasing by 5.59% from $7.387 billion to $6.974 billion. This narrowing of the trade deficit, despite a challenging global economic environment, reflects the country’s efforts to diversify its economic activities and reduce reliance on imports.
The growth in the services sector has significant implications for Pakistan’s economic future. By reducing the trade deficit and increasing foreign exchange earnings, the sector is playing a crucial role in stabilizing the economy. The positive trends also suggest that with continued investment in technology and digital infrastructure, Pakistan can further enhance its position in the global services market. Additionally, the increased focus on digitalization is opening new avenues for job creation, especially in tech-driven fields. As more startups and freelancers gain access to international markets, the demand for skilled professionals in software development, digital marketing, and data analysis is expected to rise, providing new job opportunities for Pakistan’s youth.
very useful article
thanks