The economic activities that emerge from connecting individuals, businesses, devices, data and operations through digital technology are known as the digital economy. It includes online connections and transactions across multiple sectors and technologies, such as the Internet, mobile technology, big data and information and communications technology. The digital economy differs from a traditional economy because it relies on digital technology, online transactions and its transformative effect on traditional industries. Digital innovations such as the Internet of Things (IoT), artificial intelligence (AI), virtual reality, blockchain and autonomous vehicles all play a part in creating a digital economy.
In the early months of 2025, Pakistan stands at a pivotal moment in its economic journey. While overall GDP growth remains modest-projected at 2.7 per cent for fiscal year 2025-the nation’s digital economy is emerging as a powerful engine of transformation. With the rapid adoption of smartphones, expansion of e-services, and innovation across fintech, e-commerce, freelancing, and digital public infrastructure, Pakistan’s digital sector is poised to significantly reshape its economic destiny.
Pakistan’s digital economy is its future. The challenge now is to commit, execute, and ensure that this future becomes a reality.
Pakistan has recorded 116 million internet users, representing nearly 45.7 per cent of the population in 2025. This marks a 1.5 per cent increase from 2024 but still leaves over half the population offline. Additionally, there are 190 million mobile connections in the country, with 75 per cent penetration, and 74 per cent of those connections being broadband capable. Mobile internet performance has also improved, with average download speeds reaching 20.9 Mbps-a 25 per cent year-over-year increase-while fixed-line speeds have risen to 15.5 Mbps, an 18 per cent increase.
Social media usage is another indicator of the digital boom. Pakistan now has 66.9 million active social media users, which is approximately 26 per cent of the population. YouTube alone reaches 55.9 million users (22 per cent), while TikTok has surged to 66.9 million adult users-accounting for 57 per cent of internet users. Instagram follows with 18.8 million users. Also, IT exports have exceeded USD 5 billion in 2024, largely driven by software development, freelance platforms, and IT-enabled service firms. These figures reflect more than just increased connectivity; they demonstrate Pakistan’s growing digital capability and readiness to participate in the global digital economy.
The share of the digital economy in Pakistan’s GDP is also gaining ground. According to a report, this share has grown from approximately 1-1.5 per cent in 2020 to 1.5-3 per cent in 2023 and 3 – 5 per cent in 2025. It is forecast to reach 3-5 per cent by the end of 2025. Even at the conservative end, this progress represents a vital lever for national growth. Over the past two decades, the digital economy in Pakistan has shown compound annual growth-thanks largely to a young population, with 64 per cent under the age of 30, and rising internet access.
Several core drivers are pushing this digital expansion forward. E-commerce and fintech are leading the charge. Platforms like Daraz, Alibaba, and a growing network of micro-lending fintechs are helping bring more unbanked citizens into the financial system. Visa has partnered with local platforms such as 1Link to dramatically increase the number of merchants that accept digital payments-an important step in a country where just 60 per cent of adults have bank accounts.
Digital public infrastructure is another cornerstone. Pakistan’s instant payment system, Raast, processed PKR 4.69 trillion in peer-to-peer transactions as of Q1 FY2025. Institutions such as the World Bank recognize Raast and the national digital ID system as key enablers of better governance, SME support, and wider financial inclusion.
Freelancing and IT services have also flourished. Pakistan ranks fourth globally in freelancing, with IT exports now exceeding USD 5 billion. However, this growth faces a significant bottleneck; more than 80 per cent of IT graduates are not industry-ready. Initiatives like PITB’s e-Rozgaar and the federal government’s Presidential Initiative for Artificial Intelligence and Computing (PIAIC) are working to bridge this gap by providing specialized digital skills training.
Blockchain and cryptocurrency regulation is another major frontier. In March 2025, the government formed the Pakistan Crypto Council, tasked with regulating nearly 40 million users and overseeing annual crypto trading volumes nearing $300 billion. Newly introduced laws support Bitcoin mining, the development of AI data centres, and skill-building programs focused on youth empowerment.
Startups and artificial intelligence are gaining ground too. Through PIAIC, thousands of young Pakistanis have been trained in AI, blockchain, and IoT. The next step involves creating an industrial AI policy that can integrate these technologies into automation, agriculture, and manufacturing-enhancing national resilience and global competitiveness.
The economic potential of this transformation is enormous. According to Google’s assessment, digital business activity in Pakistan contributed PKR 2.6 trillion and supported approximately 865,000 jobs. Moreover, digital advancements added PKR 1.3 trillion in value to household incomes. A World Bank-backed study estimates that closing the digital skills gap alone could add PKR 2.8 trillion to GDP by 2030. Meanwhile, the World Economic Forum suggests that widespread adoption of digital payments can boost GDP by as much as 7 per cent.
Despite this optimism, several challenges remain. The most pressing is the digital divide around 54 per cent of the population still lacks internet access, particularly in rural and underserved regions. Fixed broadband services remain costly, and disparities in digital infrastructure at the district level limit access to digital services. Furthermore, the gap between academic output and industry demand for digital skills remains wide. This mismatch must be addressed urgently through scalable training programs and industry-academic partnerships.
Pakistan also lacks a fully developed digital governance structure. Policies for open data, digital rights, cybersecurity, and innovation ecosystems remain inconsistent or under-enforced. Without reforms in digital regulation and governance transparency, Pakistan risks slowing down its digital momentum.
To accelerate digital transformation, several strategic actions are recommended. Firstly, Pakistan must expand connectivity by investing in 4G and 5G infrastructure nationwide, particularly in rural areas. Secondly, digital literacy programs like PIAIC and e-Rozgaar should be scaled to train tens of thousands of individuals per month in high-demand fields like AI, IoT, and blockchain. Thirdly, public-private partnerships must continue to strengthen digital infrastructure including national IDs, instant payment platforms, and open-data systems. Fourthly, the government should incentivize innovation by offering tax breaks, startup funding, and regulatory sandboxes to support fintech, AI, and blockchain-based ventures. Fifthly, merchant and user adoption of digital payments should be promoted using POS terminals, QR-code systems, and integration of remittances into formal financial channels. Lastly, gender-sensitive and inclusive policies are needed to ensure women and marginalized groups can actively participate in the digital economy.
Looking ahead, Pakistan has the opportunity to double its digital economy’s contribution to GDP from 5 per cent in 2025 to as much as 10-15 per cent by 2030. This could translate into an annual addition of $20-40 billion via IT exports, e-commerce, digital finance, and platform services. If managed well, the country can become a leading digital economy in South Asia, marked by high growth, inclusive employment, and a robust, shock-resistant economic framework.
Realizing this vision requires an integrated approach; coordinated efforts in policy-making, infrastructure development, skills training, and inclusive digital access. With thoughtful leadership, Pakistan can shift from a growth rate of 2.7 per cent in 2025 to a sustained 4-6 per cent by 2030-fueled not by traditional sectors, but by apps, algorithms, and access.
The direction is clear. The digital economy is the future of Pakistan. The challenge now is to commit, execute, and ensure that the future becomes a reality.
The writer is a PhD scholar and author of various books on international relations, criminology and gender studies. He can be reached at fastian. mentor @gmail.com