By Moaaz Manzoor

Pakistan’s economy recorded provisional growth of 3.70 percent during FY2025-26, driven by recovery in manufacturing, construction and services despite continued pressure on agriculture, energy and thw external sector.

The latest estimates were approved during the 117th meeting of the National Accounts Committee (NAC) held at the Pakistan Bureau of Statistics (PBS), which also revised upward quarterly growth estimates for the ongoing fiscal year.

According to the updated estimates, GDP growth for Q1 and Q2 FY2025-26 was revised upward to 3.92 percent and 4.05 percent, respectively, compared with earlier estimates of 3.63 percent and 3.89 percent. The economy also posted provisional growth of 3.99 percent during the third quarter of FY2025-26.

The revised figures showed that the industry and services sectors remained the main drivers of economic expansion during the fiscal year. The industrial sector grew 3.51 percent during FY2025-26, while services expanded 4.09 percent. Agriculture recorded growth of 2.89 percent.

Within industry, manufacturing activity showed a notable recovery after weakness in previous years. Large-scale manufacturing expanded 6.11 percent during FY2025-26 after contracting 0.69 percent a year earlier.

The recovery was supported by higher production across several manufacturing segments. Automobile production surged 61.66 percent, transport equipment grew 39.93 percent, furniture increased 20.45 percent, and electrical equipment expanded 11.87 percent during the fiscal year. Petroleum products recorded growth of 10.92 percent, while food manufacturing rose 9.77 percent.

Construction activity also maintained positive momentum during the year. The sector grew 5.73 percent following growth of 8.77 percent last year, supported by increased construction-related spending by both the private sector and the government.

However, some industrial sectors continued to face pressure. Electricity, gas and water supply contracted 10.63 percent during FY2025-26, mainly due to lower energy subsidies, slower output growth and a high base effect from the previous fiscal year, when the sector had expanded 29.60 percent. Mining and quarrying posted modest growth of 0.38 percent as production of natural gas and crude oil declined during the year.

The agriculture sector also showed mixed performance despite overall positive growth. Important crops recorded growth of 0.65 percent due to varying trends across major crops. Wheat production increased 4.3 percent to 29.605 million tons, while sugarcane output rose 6.20 percent to 89.45 million tons. Rice production also increased 2.80 percent to 9.998 million tons.

However, maize production declined 2.68 percent to 8.794 million tons, while cotton production fell 0.5 percent to 7.052 million bales. Other crops grew 2.43 percent, supported by strong increases in gram, potato, mango, banana, turmeric and chillies production. Livestock, the largest component within agriculture, expanded 3.75 percent during FY2025-26.

Meanwhile, the services sector continued contributing steadily to overall growth. Information and communication expanded 7.52 percent, public administration and social security grew 8.54 percent, education increased 5.23 percent, and human health and social work activities rose 6.85 percent during the fiscal year. Wholesale and retail trade recorded growth of 3.71 percent, while transport and storage expanded 2.31 percent.

The latest estimates also showed an increase in the overall size of the economy. Pakistan’s economy reached Rs126.9 trillion, equivalent to $452.1 billion, during FY2025-26, compared with Rs114 trillion or $408.2 billion a year earlier. Per capita income increased to Rs533,629, equivalent to $1,901.

The updated growth estimates indicate that Pakistan’s economy maintained a gradual recovery during FY2025-26, even as ongoing pressures in energy, agriculture and the external sector continued to weigh on the broader outlook.

Credit: INP-WealthPk