Situated at the confluence of South Asia, Central Asia, and the Middle East, Pakistan's strategic location has bestowed upon it a unique role in the global trade landscape, but it has also made the country vulnerable to various forms of illicit trade. From the proliferation of counterfeit products and the clandestine movement of smuggled goods to the shadowy world of illegal wildlife trade and the intricate networks of money laundering, Pakistan grapples with significant challenges in its relentless struggle against these illicit activities.
The shadow economy in Pakistan is equal to about 40 percent of GDP and significant levels of illicit trade can be found in many key economic sectors, including food fraud, illicit petroleum products, counterfeiting and piracy, and trade in falsified and substandard pharmaceuticals. Pakistan’s geographical positioning makes it a vulnerable transit country for illicit trade. Its long and porous borders with Iran, Afghanistan, and India exposes it to illicit trade in several sectors, both as an origin and destination hotspot. This problem has persisted for years, hand-in-hand with a wide range of other illegal activities like money laundering, organized crime, corruption, and human trafficking.
The shadow economy in Pakistan is equal to about 40 percent of GDP and significant levels of illicit trade can be found in many key economic sectors, including food fraud, illicit petroleum products, counterfeiting and piracy, and trade in falsified and substandard pharmaceuticals. Pakistan’s geographical positioning makes it a vulnerable transit country for illicit trade. Its long and porous borders with Iran, Afghanistan, and India exposes it to illicit trade in several sectors, both as an origin and destination hotspot. This problem has persisted for years, hand-in-hand with a wide range of other illegal activities like money laundering, organized crime, corruption, and human trafficking.
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FEATURED REPORT Pakistan's Battle Against Illicit Trade: An Analysis of Challenges and Pathways to Resilience (2025)
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TRACIT presents policy recommendations to government in Pakistan
6 May 2024, Islamabad - The Transnational Alliance to Combat Illicit Trade (TRACIT) presented policy recommendations to government officials and industry stakeholders participating in a forum hosted by Pakistani think tank, the Policy Research Institute of Market Economy (PRIME). The recommendations were derived from TRACIT's latest report, Illicit Trade in Pakistan: The Twin Task of Combating Illicit Trade and Boosting Economic Growth, which highlights the impact of Pakistan’s ongoing economic problems with a staggering 25 percent inflation rate. High levels of inflation have had a disastrous impact on consumer purchasing power and product affordability, which is widely regarded as the primary driver for illicit trade.
“Record high inflation is perhaps the most pressing problem,” said TRACIT Director-General Jeff Hardy. “When prices rise faster than incomes, illicit and black-market products become more tempting to consumers desperately seeking cheaper alternatives.” Speaking on this occasion, Executive Director of PRIME, Dr Ali Salman explained that “the 68 Billion Dollar black and gray markets are fueled by high taxes, tariffs and duties, because in these times of crippling inflation, citizens have nowhere else to go”. According to Dr Salman, “Unless we minimize barriers to legal trade, the government of Pakistan has no chance of generating enough growth to raise required tax revenues and is set on a clear path towards bankruptcy”. |
TRACIT presents report to EMEA Security Conference
8 November 2023, Dubai, UAE - The Transnational Alliance to Combat Illicit Trade (TRACIT) today published its latest report, Illicit Trade in Pakistan: The Twin Task of Combating Illicit Trade and Boosting Economic Growth, at the EMEA Security Conference & Exhibition.
“Record high inflation is perhaps the most pressing problem,” said TRACIT Deputy Director-General Stefano Betti. “When prices rise faster than incomes, cheaper goods including illicit and black-market products become more tempting to consumers.” In Pakistan, the shadow economy is already equal to about 40 percent of GDP and significant levels of illicit trade can be found in many key economic sectors, including food fraud, illicit petroleum products, counterfeiting, and trade in falsified and substandard pharmaceuticals. “These illicit markets have plagued the country for years – perpetuating a vicious circle of associated money laundering, organized crime, corruption, and tax evasion,” said Mr. Betti. |
Past Publications
Illicit Trade in Pakistan: The Twin Task of Combating Illicit Trade and Boosting Economic Growth (2023)
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The TRACIT report, Illicit Trade in Pakistan: The Twin Task of Combating Illicit Trade and Boosting Economic Growth investigates the situation of illicit trade across sectors in Pakistan.
The convergence of various structural weaknesses in Pakistan’s economy challenges its ability to sustain recent gains in poverty reduction and undermines objectives for long-term growth in GDP. Since these factors also create fertile ground for illicit markets to strengthen, this report investigates the associated impacts and suggests remedies for consideration by Pakistan’s policy leaders. The report highlights that high levels of inflation and tax evasion compound the problems, and urgently calls for a comprehensive and coordinated approach to address them. The report contends that effectively tackling illicit trade will be a crucial ingredient in achieving Pakistan's economic prospects. |