By Qamar Bashir
Among news of an economic slowdown in China and economic challenges in Pakistan, I
was surprised to notice the outstanding ratings of both countries on the economic front
based on the Purchasing Power Parity (PPP) method. According to the World Bank,
China, with an economy of $34.66 trillion, assumed the first position, outperforming the
US, which stood in second place with a PPP GDP of $27.72 trillion. According to the
World Bank, Pakistan ranked 25th globally with a PPP GDP of $1.50 trillion,
outperforming countries like the Netherlands, Argentina, Malaysia, South Africa,
Singapore, Switzerland, Israel, Denmark, and many others.
The performance of both China and Pakistan was even more impressive according to data
released by the International Monetary Fund (IMF) based on Gross Domestic Product
(GDP) measured in Purchasing Power Parity (PPP). According to the IMF, China's GDP
(PPP) was projected at $39.44 trillion, positioning it as the world's largest economy by
PPP, while the United States trailed behind at $30.34 trillion, making it the second-largest
economy by PPP. These projections highlight China's significant economic lead over the
United States in PPP terms, with China's economy expected to be about 30% larger than
that of the U.S. in 2025.
According to the IMF, though the prediction about Pakistan’s economy was not as
optimistic as that of the World Bank, Pakistan's projected GDP (PPP) for 2025 is
approximately $1.66 trillion, ranking it 26th globally. This places Pakistan ahead of
several European countries such as Portugal ($529.9 billion), Greece ($453.4 billion), and
the Czech Republic ($645.5 billion), as well as Asian nations like Singapore ($918.4
billion), Malaysia ($1.46 trillion), and the Philippines ($1.48 trillion).
World Economics' analysis and database provide a broader perspective on GDP figures
by incorporating adjustments for the size of the informal economy and outdated base year data. According to World Economics, China’s GDP (PPP) is estimated to be $42.817
trillion for 2025, capturing the vast informal economy that significantly contributes to its
economic activity. This adjusted figure underscores China's position as the world's largest
economy by PPP, reflecting the expansive informal sector and its unregistered
contributions to economic output. Such recalibrations highlight China's global economic
dominance and the scale of activities not captured in official datasets.
World Economics presented one of the most impressive predictions for the year 2025,
estimating Pakistan's GDP at $2.08 trillion, which is 46% larger than the official World
Bank estimate of $1.347 trillion for 2023. This revised figure elevates Pakistan's GDP
(PPP) ranking for 2025 to approximately 24th place globally, surpassing many countries
of Europe and Africa, South America, and Asia. The adjustment highlights an economy
far larger than previously recognized, largely due to the inclusion of Pakistan’s
substantial informal sector. This emphasizes the importance of integrating informal
activities into formal structures to promote sustainable growth.
This adjustment accounts for Pakistan's substantial informal economy, which includes
unrecorded and untaxed transactions that significantly contribute to economic activity.
By incorporating this informal sector and updating the base year for GDP calculations,
the revised figure provides a more accurate and comprehensive assessment of Pakistan's
economic size. This re-evaluation strengthens Pakistan's position in global rankings,
highlighting its untapped potential and opportunities to formalize and expand its
economic base for sustainable growth.
China's economic prowess in 2025 is expected to solidify its position as the world's
largest economy by Purchasing Power Parity (PPP), with a projected GDP (PPP) of
$34.66 trillion (WB) and 39.44 trillion (IMF) and $42.817 trillion (WE). This dominance
is driven by its vast population of over 1.4 billion, providing a significant labor force and
consumer market. As the "factory of the world," China continues to excel in
manufacturing, particularly in electronics, machinery, and textiles, while advancing its
technological capabilities in robotics, artificial intelligence, and smart manufacturing.
President Xi Jinping's ideology to transition China's industries toward quality-oriented
production and fundamentally upgrade its industrial infrastructure ensures that the
economy remains competitive and innovative. This vision counters predictions of a
slowing growth trajectory, highlighting China's resilience and adaptability in a rapidly
evolving global economy. Moreover, initiatives like the Belt and Road Initiative (BRI)
expand China's trade networks, solidify geopolitical influence, and strengthen economic
ties across Asia, Africa, and Europe.
China's leadership in renewable energy, urbanization, and infrastructure development
further boosts its economic clout. It leads the world in solar and wind energy production,
aligning with global sustainability goals and ensuring energy security. The development
of smart cities and the world's most extensive high-speed rail network enhances
connectivity and trade efficiency. Financially, China’s efforts to internationalize the yuan
and its massive foreign currency reserves reinforce its global monetary influence. The
inherent political stability and continuation of policies within China's governance system
serve as a foundational strength, enabling consistent long-term planning and execution of
economic strategies. While challenges such as slowing population growth, economic
rebalancing, and geopolitical tensions persist, the combination of forward-thinking
industrial reforms and stable governance positions China to maintain its upward growth
trajectory and dispel concerns about economic deceleration.
Pakistan’s economy demonstrates inherent strengths and resilience that have enabled it to
secure rankings of 24th to 26th globally in GDP (PPP), outperforming many major
economies. Its young and dynamic population, with over 60% under 30, drives economic
growth and expands a rapidly urbanizing consumer market. The substantial contribution
of its informal economy, which includes unrecorded and non-taxed transactions, reveals a
larger economic footprint than official figures suggest. Strategically located at the
crossroads of South Asia, Central Asia, and the Middle East, Pakistan serves as a critical
transit route for regional trade, bolstered by the China-Pakistan Economic Corridor
(CPEC). Its strong agricultural base, abundant natural resources, and emerging industries
like IT services and textiles diversify its economy and enhance global competitiveness.
Additionally, remittances from its large diaspora provide a steady inflow of foreign
exchange, supporting economic stability. Despite global challenges, Pakistan has
demonstrated resilience through structural reforms, adaptive governance, and efforts to
attract foreign investment. These factors, coupled with its untapped potential and
strategic initiatives, position Pakistan as a rising economy with opportunities for
sustained growth and an improving global economic stature.
The claim that Pakistan's GDP (PPP) is 5% of China's GDP (PPP) is nearly accurate, with
the actual figure being approximately 4.86%. Here's the corrected statement:
China is the economic leader of the world on a PPP basis, and it is only a matter of time
before it becomes the world leader in terms of nominal GDP growth. While Pakistan’s
GDP (PPP) is approximately 4.86% of China’s GDP, it has the potential to achieve an
influential economic role provided it brings political stability, sets the right direction,
invests in research and development, and fosters innovation and creativity in its
industrial, services, and agricultural sectors.
