Pakistan is a developing country which has faced a number of challenges on both political and economic fronts. Despite being a very poor country in 1947, Pakistan's economic growth rate was better than the global average during the subsequent four decades, but imprudent policies led to a slowdown in the late 1990s. Recently, wide-ranging economic reforms have resulted in a stronger economic outlook and accelerated growth especially in the manufacturing and financial services sectors. There has been great improvement in the foreign exchange position and rapid growth in hard currency reserves in recent years. The 2005 estimate of foreign debt was close to US$40 billion. However, this has decreased in recent years with assistance from the International Monetary Fund (IMF) and debt-relief from the United States. Pakistan's gross domestic product (GDP) in 2005 was estimated at US$404.6 billion and its per capita GDP was US$2,400. Pakistan's GDP growth rates have seen a steady increase over the last 5 years. In 2001, the country's GDP growth rate was at 1.8%, but in the fiscal year that ended June 30, 2005, the nominal GDP growth rate peaked at 8.4%. This put Pakistan's growth rate as the second-highest after China, among the ten most populous countries in the world. However, inflationary pressures and a below par savings rate, among other economic factors, would make it difficult to sustain a high growth rate.

The growth of non-agricultural sectors has changed the structure of the economy, and agriculture now only accounts for roughly 20% of the GDP. The service sector accounts for 53% of the country's GDP with wholesale and retail trade forming 30% of this sector. In recent times, the Karachi Stock Exchange has soared, along with most of the world's emerging markets. Large amounts of foreign invesmentments have been made into several industries. The top industries in Pakistan are telecom, software, automotives, textiles, cement, fertilizer, steel, ship building, and more recently, aerospace.