Pakistan has a predominantly agricultural economy, with agriculture (notably cotton), fisheries and forestry contributing about 20 per cent of GDP, and it has large deposits of natural gas; reserves of gas were estimated in January 2014 to be 600 billion cubic metres. From the 1950s, manufacturing took off rapidly.
The economy has been developed through a series of five-year plans. From the 1960s protectionist policies were adopted, followed by nationalisations in the 1970s and, from 1988, encouragement of private enterprise and privatisation of state-owned banks and manufacturing enterprises.
After years of strong growth, the economy stalled in the latter 1990s, with a widening trade deficit and large external debt. In March 1997, the Sharif government embarked on an economic revitalisation programme to enhance exports, reduce inflation, generate employment and widen the tax base (there were then only one million income tax payers, mainly belonging to the urban middle class). An IMF structural adjustment programme was approved in October 1997, but suspended in May 1999, until progress on economic reform was accelerated.
After the October 1999 coup, the military government set a new agenda of reforms, opening the way for the renewal of IMF support in late 2000 and resulting in good growth for most of the 2000s. From November 2002, the civilian government continued with this agenda which included the resumption of privatisation, giving priority to agriculture, smaller enterprises, and oil and gas exploration, as well as encouraging the development of a computer software industry.
The economy grew by 6.6 per cent p.a. over 2004–08, but then, in 2008, growth slowed (to an annual rate of 1.7 per cent) in response to the global downturn and collapse of world demand. Devastating floods in July 2010 then caused massive disruption to economic activity across the country and it was only in 2012 that growth returned to levels above four per cent p.a., continuing in 2013–15.