• Pakistan’s strategic position at the crossroads of South Asia, Central Asia, and the Middle East makes it a major trade hub and a major target for illicit trade.
  • The shadow economy is estimated at around 40% of GDP, with widespread illicit activity in food, fuel, pharmaceuticals, and counterfeit goods.
  • Long, porous borders with Iran, Afghanistan, and India further expose the country to smuggling, organized crime, money laundering, and human trafficking, making illicit trade a persistent challenge across key sectors.
  • TRACIT works with an independent Pakistani think tank, Policy Research Institute of Market Economy (PRIME)
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FEATURED REPORTS
Pakistan's Battle Against Illicit Trade: An Analysis of Challenges and Pathways to Resilience (2025)​
The TRACIT Report on Pakistan's Battle Against Illicit Trade: An Analysis of Challenges and Pathways to Resilience reviews the state of illicit trade in the country and evaluates Pakistan's performance using findings from the 2025 TRACIT Illicit Trade Index—a global framework measuring resilience to illicit trade across 158 countries. This updated assessment provides policymakers with insights into evolving risks, implementation progress, and areas requiring renewed focus.

Associated materials:
Illicit Trade in Pakistan:  The Twin Task of Combating Illicit Trade and Boosting Economic Growth (2023)

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.
EVENTS

TRACIT co-hosted the ‘Pakistan’s Battle Against Illicit Trade' event together with PRIME Institute

May 2025, Islamabad - TRACIT's Director General, Jeffrey Hardy, presented Pakistan’s performance on TRACIT's 2025 Illicit Trade Index, highlighting key policy gaps and areas for improvement. TRACIT also launched a new report, 'Pakistan's Battle Against Illicit Trade: An Analysis of Challenges and Pathways to Resilience', which offers an in-depth analysis of the country’s strengths, vulnerabilities, and forward-looking recommendations.

Jeff was joined on the panel by Ali Salman, Executive Director of PRIME Institute, and Rana Ihsaan Afzal Khan, Coordinator to the Prime Minister of Pakistan, who outlined the government’s ongoing efforts and investments to mitigate illicit trade.

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.
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“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.
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“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.
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