Tariffs, oil prices, interest rates, and shifting global dynamics have become the principal components of a complex economic jigsaw, yet for Pakistan, these disruptions in 2025 may well hold the seeds of a transformative export opportunity. The United States’ ongoing tariff-first approach, recently reinforced in April 2025, has seen new levies placed on Pakistani exports to the tune of 29 percent. Yet, these remain significantly lower than those imposed on Vietnam at 46 percent and Bangladesh at 37 percent, providing Pakistan with a unique comparative edge despite its own tariff burdens. Pakistan’s exporters must act now to fill the space left by regional competitors facing steeper barriers to the US market.
Pakistan, with its depreciated rupee averaging PKR 282 to the dollar this fiscal year, improved macroeconomic indicators, and robust infrastructural commitments, can capture value in global supply chains disrupted by protectionist measures. Bangladesh’s textile exports to the US are set to decline by 7 percent year-on-year due to tariff shocks, and Vietnam’s electronics sector has reported a 9.2 percent export drop in Q1 2025 alone. By contrast, Pakistan has recorded a modest 4.3 percent year-on-year growth in exports, rising to USD 29.7 billion as of March 2025, largely aided by value-added textile and emerging pharmaceutical exports. This momentum needs strategic capitalisation via sector-specific incentives, aggressive trade diplomacy, and institutional facilitation for exporters.
Fueling this momentum is a notable reduction in global crude oil prices, with Brent crude falling below USD 60 per barrel as of April 9, 2025-the lowest since February 2021. Driven by weakening global demand and mounting inventories, this decline offers a valuable fiscal cushion. Pakistan’s oil import bill for FY24 stood at USD 16.1 billion, a figure poised to fall by at least 15 percent if current trends persist. Domestically, the government has responded swiftly. Just last week, the Prime Minister announced a PKR 7.59 per unit reduction in electricity tariffs for industrial users, bringing average rates down to PKR 40.51 per unit. This alone could lower annual production costs by over PKR 400 billion based on NEPRA-reported industrial consumption trends. With inflation easing from a peak of 38 percent in mid-2023 to 18.7 percent in March 2025, room has opened up for policy rate cuts. The State Bank of Pakistan is widely expected to reduce the policy rate from the current 20 percent to 18 percent in the coming monetary policy committee meeting. Each 100-basis-point cut could reduce private sector borrowing costs by PKR 225 billion annually, with major spillover effects on investment, employment, and capacity expansion.
Trade facilitation cannot be achieved without professionalizing institutions like the Trade Development Authority of Pakistan and customs agencies.
These macroeconomic tailwinds must be leveraged for structural reforms and export augmentation. Pakistan’s heavy industries, long underdeveloped, can finally find liftoff. The Dhabeji Special Economic Zone (DSEZ) is now operational with foreign investments from China, Saudi Arabia, and Uzbekistan targeted toward cement, fertilizer, mineral processing, and automotive component manufacturing. Pakistan’s mineral reserves-valued at over USD 6 trillion, including copper, lithium, and rare earths-are being aggressively marketed to international partners through forums such as the Pakistan Minerals Investment Summit 2025. The Reko Diq project alone, now in development with Barrick Gold, holds the potential to generate over USD 1.2 billion annually in copper and gold exports by 2028. These are not distant dreams but near-term engines for growth if logistical and fiscal frameworks are realigned efficiently.
To amplify industrial gains, Pakistan must also focus on port efficiency, digitized customs, and revival of underutilized financial tools like the Export Development Fund. The EDF saw only 62 percent utilization in FY24, despite budgetary allocations of PKR 17 billion. The fund must be retooled to support freight subsidies, certification grants, and digital training for export SMEs. Meanwhile, e-commerce and digital trade remain Pakistan’s untapped goldmine. Digital services exports were barely USD 2.3 billion last year, whereas regional competitors like India crossed USD 180 billion. With 52 percent internet penetration and a growing freelance workforce, Pakistan must implement a policy blend of tax incentives, PayPal integration, and vocational training to scale exports in software, design, and digital consultancy.
The potential also lies in using trade re-alignments caused by geopolitical fault lines and reshoring strategies adopted post-pandemic. With US-China decoupling, many Western firms are shifting production out of East Asia. Pakistan must market itself not only as an alternative to China, but as a diversified hub with access to Central Asia, West Asia, and East Africa. This geographic centrality must be supplemented by foreign direct investment corridors. Investment from countries like Turkey, UAE, and Malaysia in semi-finished goods, industrial chemicals, and defense-related equipment can help Pakistan establish a serious footprint in the value chain. Heavy manufacturing for railway cars, buses, electric vehicles, and agricultural implements should be developed in clusters near Gwadar, Faisalabad, and D.I. Khan where labor is available and logistics can be streamlined.
Further diversification of Pakistan’s export basket is critical. Pharmaceuticals and biotechnology hold promise, particularly as Pakistani generics can fill global shortages in oncology and diabetes drugs at lower cost than India. With appropriate FDA and EMA compliance units set up under DRAP and supported by international certification partners, Pakistan can scale pharmaceutical exports from USD 300 million today to USD 2 billion by 2030. Similarly, halal meat, dairy, and processed food exports remain far below potential due to inconsistent hygiene protocols and fragmented cold chain infrastructure. With Saudi investment already flowing into this space, Pakistan should create export-focused agro-industrial zones near Lahore, Karachi, and Bahawalpur.
Textiles, although the current mainstay, should not remain raw and unfinished. A value-addition drive must incentivize brands and design houses to work with Pakistani firms to develop full-package solutions. From denim to sportswear, from digital printing to home textiles, the entire range must be supported through tax breaks, innovation grants, and branding assistance. Trade officers stationed in embassies must be tasked with concrete sales targets. Meanwhile, a fast-track refund and regulatory clearance process should be introduced for firms exporting more than USD 10 million annually.
The reconfiguration of global energy, shipping routes, and investment preferences has also opened doors for blue economy exploitation. Ship recycling at Gadani, marine food processing in Gwadar, and ferry-based regional trade routes with Iran and Oman can all be formalized under public-private models. Digital export policy must go hand-in-hand with financial reforms. Fintech can solve Pakistan’s informal sector bottlenecks and improve traceability for small exporters. Introduction of blockchain-based customs documentation, and export-linked wallets for freelancers and SMEs will build formal records and raise financial inclusion.
Diaspora engagement is another untapped strength. With nearly 9 million Pakistanis abroad, remittances have long sustained the economy but must now be converted into equity, investment funds, and long-term industrial assets. Diaspora bonds, investment-linked citizenship paths, and startup funds targeted at export sectors can raise over USD 5 billion in non-debt capital if properly designed.
The state must also reconsider its tax philosophy on exports. Zero-rating must be universally applied across all sectors exporting more than 60 percent of output. Tax audit harassment, frequent withholding anomalies, and confusing input adjustments must be removed. Instead of treating exporters as suspects, they must be viewed as national assets.
Pakistan’s economic future is also deeply entwined with how it manages its energy transition. If renewable energy sources such as solar and wind are integrated into export zones, production costs can be reduced sustainably while also creating green export certification opportunities. The global shift toward sustainable sourcing gives Pakistan an edge in markets like the EU and Canada where environmental compliance is increasingly linked to market access. Hybrid industrial parks, powered partially by green energy and supported by digitized energy efficiency audits, can help Pakistan meet rising international ESG standards. This not only enhances competitiveness but protects long-term market share from environmentally conscious buyers.
Another layer to Pakistan’s strategy must be the leveraging of regional trade blocs. Engagement with ECO, SCO, and ASEAN observer dialogues must translate into concrete trade and investment protocols. While intra-regional trade remains under 15 percent of total exports, Pakistan can benefit by securing bilateral agreements that target tariff rationalization, customs harmonization, and mutual recognition of standards. Countries like Kazakhstan, Uzbekistan, and Azerbaijan offer high demand for construction materials, fertilizers, and food items-products that Pakistan can supply competitively with appropriate logistical arrangements.
Capacity-building in governance institutions is equally vital. Trade facilitation cannot be achieved without professionalizing institutions like the Trade Development Authority of Pakistan, the Board of Investment, and customs agencies. Introducing digital dashboards for trade data transparency, real-time policy monitoring, and key performance indicators for trade officers will bring credibility to Pakistan’s international economic engagements. Coupled with public-private policy roundtables and academic collaborations, these efforts will ensure policies remain aligned with economic realities and export ambitions. What further sets the stage for transformation is the convergence of falling energy costs, stable currency conditions, global supply chain diversification, and renewed international interest in Pakistan’s industrial future. Rather than viewing these as isolated events, the state must orchestrate a policy chorus aimed at sustainable exports, value addition, and industrial self-reliance. The time for complacency is over; the world is offering Pakistan a narrow but clear path to economic ascendancy.
The writer is a financial expert and can be reached at jawadsaleem.1982@ gmail.com. He tweets @JawadSaleem1982