PESTLE Analysis of Pakistan
Pakistan is a South Asian country that shares borders with India, China, Afghanistan, the Arabian Sea, the Gulf of Oman, and Iran. The capital city of the Islamic Republic of Pakistan is Islamabad. Karachi is one of the largest cities in the country. The total area of Pakistan is 881,913 km2, and its population is 220.9 million (2020). In terms of area and size, it is the 33rd largest country in the world. After Indonesia, Pakistan is the 2nd largest Muslim country in terms of population. Let’s read the PESTLE analysis of Pakistan.
Pakistan is a home to various ancient civilizations, such as the Indus Valley civilization. It is one of the most prominent civilizations in the world. Different invaders, conquerors, and rulers occupied Pakistan in history. The British Empire was the last invaders. In 1947, the British Empire divided the sub-continent. As a result, Pakistan gained independence on Aug 14, 1947.
In this article, we will discuss the PESTLE analysis of Pakistan. Thus strategic management tool will help to identify macro-environmental factors such as political, economic, social, technological, legal, and environmental. So, let’s begin!
Political Factors | PESTLE Analysis of Pakistan
- Political or Government System:
In Pakistan, the government follows the Federal Parliamentary Democratic System of Government. The role of Prime Minister is huge when it comes to running the government and administration. The power of the President is not so significant. Pakistan politics are crowded with big names like PML (N), PTI, PPP, ANP, MQM, and more when it comes to political parties. It is important to quote that the country’s military has a strong impact on politics. No party can get power without the consent of military generals. According to some critics, the military’s role in the country’s politics is not good for the country’s growth.
- Diplomatic Relations:
In general, the country has established strong relations with other countries, including the two giants such as the USA and China. But, its friendship with China is proof that it gives importance to neighboring countries. It is an unbreakable and rock-solid connection. On the other hand, its only rival of Pakistan is India.
- Conflict with India:
India is one of the fastest-growing and developing countries after China. Moreover, Pakistan’s conflict with India over some major issues is really concerning. The conflict is due to the LoC, water, border, and Kashmir. But, the culture, language, and history of both countries are almost the same. If both countries collaborate with each other, no one can stop them to make fast progress.
- Political Instability and Corruption:
The main problem in Pakistan is the high level of corruption. According to the rankings of Transparency International, Pakistan is one of the most corrupt countries in the world. The political history of Pakistan is not so good. The political instability has damaged the country’s image and economic condition. Protests, extremist groups, strikes, political assassinations, and other factors have destabilized the country’s political system.
Economic Factors | PESTLE Analysis of Pakistan
- Gross Domestic Product:
In 2021, the annual GDP of Pakistan was 264 billion dollars. Its per capita income was 1321.3 dollars in 2021. On the other hand, the country is trying to become one of the top economies by 2047.
- Foreign Direct Investment:
FDI is very crucial for the economy of the country. When it comes to investors, China is one of the largest investors in Pakistan. Other countries like the USA, South Korea, Japan, the UK, and Hong Kong are also investing in the country. The country can attract more foreign investments by increasing the domestic consumption level. For this reason, the company should enhance local spending power.
- Economic Challenges:
Instability, inconsistency, corruption in government, personal political strategies, bad law enforcement policies, and an unfriendly business environment have created so many difficulties for the country. These challenges are hurting the economic condition of the country and preventing foreign investors from investing in Pakistan.
- Imports and Exports:
Crude oil, gas, palm oil, refined petroleum, and other similar products are the top imports of Pakistan. They import these things from China, UAE, Japan, Saudi Arabia, and Indonesia. House linen, non-knit women’s suits and men’s dress, and pure cotton are Pakistan’s top exports. The country exports these things to Germany, the USA, Afghanistan, China, and the UK.
Social Factors | PESTLE Analysis of Pakistan
- Demography:
The total population of the country was 220.9 million in 2020. It ranks 5th position when it comes to the most populated countries globally. Islam is the official religion of Pakistan and Urdu is the official language. More than 97 percent of the people are Muslim, and the other 3 percent are minorities.
- Trends:
The role of a family is critical in Pakistani society. They follow both western and eastern cultures when it comes to dressing or fashion. They have the best and cheapest labor supplies in the world. The majority of families are from the middle class group. The employment rate is very low in the country, and it is really difficult to get a suitable job without connections or references.
- Social Challenges:
Gender discrimination, unaffordable housing, shortage of food and water, poor transportation, terrorism, poor literacy rate, extremism, and other similar factors are some social challenges in Pakistan. The country has been facing these issues over the years.
Technological Factors | PESTLE Analysis of Pakistan
- Tech Innovation:
The country has become a hub of technological and scientific solutions. Pakistan is an atomic power with so many resources. After the pandemic, the trend of online shopping has increased in the country. Online shopping giants like Alibaba and Aliexpress are some leading e-commerce platforms in Pakistan. There is no doubt about it that the country is progressing in terms of digital innovation. The usage of the internet and smartphone is also mounting in the country.
- Social Media:
Social sites like Facebook, Twitter, and Instagram are very popular in Pakistan, especially among youngsters. In some regions, there is no access to the internet, which is problematic. If Pakistan wants to become a digital country, it has to upgrade its internet system. The Government of Pakistan is taking initiatives to improve tech infrastructure. They are exploiting tech opportunities. But, all these things require a huge investment and hard work. The country should promote an entrepreneurial mindset as well as innovation.
Legal Factors | PESTLE Analysis of Pakistan
- Regulations:
The country’s constitution does not allow any discrimination regarding religion, gender, caste, race etc. Their working day consists of 7 to 8 hours and strictly prevents overtime limit to 12 hours. The constitution ensures to protect the citizens of Pakistan.
Environmental Factors | PESTLE Analysis of Pakistan
- Environmental Problems:
Excess usage of plastic bags, air pollution, water pollution, land pollution, deforestation, climate change, soil degradation, and waste management are some environmental challenges that Pakistan is facing currently. The country should take some green initiatives in order to make the country a better living place.
- Tourism:
When it comes to tourism, Pakistan has a lot of potentials. Also, note that the Pakistanis are very friendly and welcoming people. Its hospitality industry is remarkable. Pakistan has much more to offer, such as mountains, natural sceneries, cuisine, landscapes, rich history, and culture. But, tourists do not prefer to select this country due to its bad reputation, terrorism, and economic instability. Pakistan can improve its tourism industry in order to make revenue.
Final Thoughts | PESTLE Analysis of Pakistan
We have concluded from this analysis that Pakistan could be the fastest-growing country in the world. But, they always face political turmoils, social, environmental, and legal problems. But, they have the potential to grow in terms of tourism and tech innovation. On the other hand, Pakistan should improve its foreign policy to strengthen relations with other countries, including India. By doing so, the country can attract foreign investments, businesses, companies, and tourists. Pakistan’s army has controlled the terrorist attack in the recent few years. It is a good thing for the growth of Pakistan and its people. We hope this PESTLE analysis will clear all your doubts about Pakistan.
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