The United States and Pakistan have a strong economic and commercial relationship, with two-way trade reaching approximately $8.89 billion in 2021. The United States is one of Pakistan’s largest trading partners and continues to be one of the leading sources of foreign direct investment. Exports from the United States to Pakistan reached $3.61 billion in 2021, a 24 percent increase over $2.91 billion in 2020. The United States was Pakistan’s largest export market in 2021 at $5.27 billion, a 35 percent increase from the previous year. American companies have profitable operations across a range of sectors, mainly fast-moving consumer goods, agriculture, financial services, franchising, information and communication technology, renewable energy, and health care services.
The current coalition government of Pakistan Muslim League-Nawaz (PML-N), Pakistan People Party (PPP) along with other political parties came into power after succeeding in a no-confidence movement against Pakistan Tehreek-e-Insaf (PTI). On the economic front, Pakistan is facing substantial challenges on both macro and micro-economic fronts. In 2019, the federal government entered a 39-month extended arrangement with the International Monetary Fund (IMF) under the Extended Fund Facility (EFF) for an estimated $6 billion bailout package. This budgetary support package is Pakistan’s 19th IMF program since gaining independence.
Pakistan is facing an economic slowdown due to increasing inflation and political instability. As an import-dependent economy, Pakistan is presently facing severe challenges, ranging from current account deficit, currency depreciation, inflation, energy crisis, trade deficit stemming from high commodity prices in the international markets, and supply chain disruptions. However, several policy reforms, coupled with assistance from multilateral financial institutions such as the IMF and growth in exports have helped Pakistan’s GDP growth rate reach 5.97 percent, surpassing the 5.74 percent recorded in the last fiscal year. The Federal Board of Revenue (FBR) reported Rs.6,143 billion (approx. $28 billion) on account of tax collections during the period of July 2021-June 2022, against the revised target of Rs.6,100 billion (approx. $30 billion).
American firms have a strong presence in Pakistan. Currently, there are more than 80 wholly-owned or majority-owned U.S. subsidiary firms registered with the American Business Council (ABC) of Pakistan and the American Business Forum (ABF). The U.S.-Pakistan Business Council, an affiliate of the U.S. Chamber of Commerce based in Washington, D.C., is another forum for U.S. companies with business and investment interests in Pakistan. Leading U.S. companies doing business in Pakistan include Pepsi-Cola, Coca-Cola, General Electric International, Wabtec, Procter and Gamble, Honeywell, NCR, Teradata, Pfizer, Abbott Laboratories, DuPont, Oracle, Microsoft, Dell, 3M, IBM, McDonald’s, KFC, Pizza Hut, Domino’s Pizza, P.F. Chang’s, IHOP, D&B, Eli Lilly, Excelerate Energy, Enercon and Caterpillar among many other U.S companies.
The U.S. corporate members of the ABC and ABF play an influential role in Pakistan’s economy by upholding global standards of corporate governance. According to the ABC, these companies have collectively invested over $1.5 billion in Pakistan, and their cumulative annual revenue totals approximately $3 billion. ABC and ABF members pay direct and indirect taxes annually, contributing significantly to the national treasury. Despite security threats and familiar emerging market concerns over intellectual property rights, contract enforcement, and economic & governance issues, the Pakistan market offers attractive trade and investment opportunities. For investors, the market has few restrictions on the movement of capital for foreign companies, no shareholding restrictions (beyond a few sensitive industry sectors), simple work-permit rules, no technology transfer requirements, and a large and sophisticated entrepreneurial class.
Pakistan and the United States signed a Trade and Investment Framework Agreement (TIFA) in 2003, which provides a forum for discussion of bilateral trade issues. The most recent TIFA intercessional meeting was held in March 2022.
Political & Economic Environment:State Department’s website for background on thecountry’s political environment.
