PESTEL analysis of Pakistan
This detailed PESTEL analysis of Pakistan aims to explore some of the political, economic, social, technological, environmental, and legal factors affecting Pakistan today. Pakistan is a powerful country in South Asia. It is the 5th most populous country in the world. It is officially known as the Islamic Republic of Pakistan.
Political factors affecting Pakistan
Pakistan is a democratic parliamentary federal republic where the Prime Minister is the head of government and the President is the ceremonial head of state. It has a multi-party parliamentary system where the key political players are Pakistan Muslim League-N, PPP, and PTI. However, the influential role of the Pakistani military establishment in the country’s politics has been questioned by many political analysts.
Pakistan has excellent diplomatic and trade relations with the neighbouring superpower, China. The Chinese Premier sees the relationship between the two countries as ‘unbreakable and rock-solid’ (The Economic Times, 2019). Pakistan also has good relationship with the USA, though the relationship has witnessed some ups and downs in the last few years.
It is worth noting that one of the biggest challenges for Pakistan is to maintain a workable and unhindered bilateral relationship with India as both countries have been at odds with each other for a long time, particularly over the issue of Kashmir. This is an extremely important issue as both countries are nuclear powers, and any serious breakdown of relationship will not only jeopardise the security of South Asia, but also of the whole world.
Corruption is a massive problem in Pakistan, though the government claims to have put substantial efforts to eradicate it. Likewise, political instability, wildcat strikes, demonstrations, assassinations, and frequent disagreements between the government and the opposition have badly affected the political environment of country over the years.
Economic factors affecting Pakistan
According to the World Bank, cited in Trading Economics (2020), the GDP of Pakistan in 2019 was worth 320 billion US dollars. Pakistan eyes on becoming the world’s one of the top 25 economies by 2025 and one of the top 10 high income economies by 2047. Though it must walk a long way to achieve the aims, it is worth mentioning that Pakistan has made significant economic growths over the years.
FDI inflow has been an important aspect of the economy of Pakistan. China is the largest investor in the country, while countries such as the USA, the UK, Japan, South Korea, and Hong Kong have also stepped up their investments. Attracting more FDI inflows and keeping domestic investors spending more in the country should help Pakistan make further economic progress. However, a selective justice system, lack of friendly business environment, and poor law and order conditions often discourage domestic investors from investing in the country (Raza, 2018).
House linens, non-knit men’s suits, rice, non-retail pure cotton yarn and non-knit women’s suits are the top exports of Pakistan which mostly go to countries such as the USA, Germany, China, the UK, and Afghanistan. Refined petroleum, crude petroleum, palm oil, petroleum gas and cars are the top imports of Pakistan which mostly come from countries such as China, the United Arab Emirates, Saudi Arabia, Indonesia, and Japan (OEC, 2020). More trade and bilateral opportunities are out there, particularly with India if the border tensions and other political disagreements can be kept at bay.
Social factors affecting Pakistan
Pakistan is the 5th most populous country in the world. As of March 2020, the total population is approximately 219 million. The major religion is Islam and a small percentage of population follows Christianity and Hinduism. The major languages are English, Urdu, Punjabi, Sindhi, Pashto, and Balochi (BBC, 2019).
The life expectancy for men is 66 years and while 68 years for women in Pakistan. Families are quite large by Western standards which has contributed to making Pakistan one of the largest domestic markets in the world. Level of poverty is declining, and a stronger middle class is steadily emerging. The country also has an affordable and abundant workforce. Family loyalty is very crucial, and nepotism is often viewed positively in workplace as this guarantees the hiring of people who can be trusted.
However, there are some social challenges facing Pakistan today. For instance, poor literacy, terrorism, food and water crisis, poor housing quality and affordability, poor transportation, poor health care system, and gender discrimination to name but a few.
Technological factors affecting Pakistan
Technological environment is the next element to discuss in the PESTEL analysis of Pakistan. Pakistan has made significant progress in science and technology over the years. It is a nuclear power to the astonishment of many great global powers. A good number of online retailers are trading very well, and Alibaba’s entry into the country has also been hailed as a great boost for digital economy. Vast majority of people have cellular phone subscriptions and the Internet usage has increased significantly as well.
Top social networking sites in Pakistan are Facebook, Twitter, Pinterest, Instagram, YouTube, and LinkedIn (StatCounter, 2020). The number of social media users is growing rapidly; however, unavailability of the Internet in many places has been hindering the digital progress. To realise the full potential of the digital revolution, Pakistan must enhance Internet connectivity, and improve digital infrastructure. Likewise, it also needs to invest in digital skills and literacy, and promote innovation and entrepreneurship (Jahangir, 2020).
Environmental factors affecting Pakistan
Pakistan is famous for its natural beauty, cultural richness, mountains, archaeological ruins and unparalleled hospitality; however, its tourism industry has not much benefited from these features due to poor law and order conditions, and negative perception of potential tourists. Pakistan also faces some serious environment challenges e.g. climate change, water scarcity, lack of clean drinking water, deforestation, air pollution, waste management, and the use of plastic bags (Huma, 2018). Likewise, the real impact of Covid-19 is expected to be devastating as well.
Legal factors affecting Pakistan
Legal environment is the last element to discuss in the PESTEL analysis of Pakistan. The Constitution of Pakistan provides for a federal democratic State, and guarantees citizens’ protection against discrimination on the basis of gender, religion, caste, race etc. The normal working hours per day are 8-9 hours and should not be more that 48 hours a week. The maximum overtime a week is restricted to 12 hours.
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Last update: 15 April 2020
BBC (2019) Pakistan country profile, available at: https://www.bbc.co.uk/news/world-south-asia-12965779 (accessed 14 April 2020)
Huma, Z. (2018) Pakistan’s environmental challenges, https://dailytimes.com.pk/247550/pakistans-environmental-challenges/ (accessed 14 April 2020)
Jahangir, R. (2020) Situationer: The digital Pakistan challenge, available at: https://www.dawn.com/news/1525977 (accessed 14 April 2020)
OEC (2020) Pakistan, available at: https://oec.world/en/profile/country/pak/ (accessed 10 April 2020)
Raza, M. (2018) What Can Pakistan Do to Attract More Investment?, available at: https://thediplomat.com/2018/06/what-can-pakistan-do-to-attract-more-investment/ (accessed 01 April 2020)
StatCounter (2020) Social Media Stats Pakistan, available at: https://gs.statcounter.com/social-media-stats/all/pakistan (accessed 12 April 2020)
The Economic Times (2019) Pakistan-China friendship unbreakable, rock-solid: Xi, available at: https://economictimes.indiatimes.com/news/international/world-news/pakistan-china-friendship-unbreakable-rock-solid-xi/articleshow/71503447.cms (accessed 12 April 2020)
Trading Economics (2020) Pakistan GDP, available at: https://tradingeconomics.com/pakistan/gdp (accessed 14 April 2020)
Photo credit: Pixabay
Author: M Rahman
M Rahman writes extensively online with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He is a graduate of Leeds Metropolitan University and London South Bank University.