By Farooq Awan

Pakistan's per capita income increased to $1,901 in FY2025-26, reflecting improved economic activity, exchange rate stability and growth across major sectors of the economy, according to the Pakistan Economic Survey 2025-26 released by the Ministry of Finance.

According to the survey, Pakistan's economy grew by 3.70% during FY2025-26, compared with 3.18% in the previous fiscal year. The growth was supported by positive contributions from agriculture, industry and services, indicating that economic recovery broadened across key sectors.

The improvement in economic activity helped raise overall national income and contributed to higher per capita earnings. The survey shows that per capita income rose to $1,901 from $1,751 in the previous year.

The increase came alongside growth in the overall size of the economy. Pakistan's gross domestic product at current market prices reached Rs126.9 trillion during FY2025-26, while the size of the economy in dollar terms increased to $452.1 billion. The survey said this reflected an 11.3% increase from the previous year’s Rs114.0 trillion, or $408.2 billion.

According to the survey, growth was recorded across all major sectors of the economy. Agriculture expanded by 2.89%, industry grew by 3.51%, and services recorded growth of 4.09%.

The services sector remained the largest contributor to economic output, accounting for 58.42% of GDP. Growth in information and communication services, wholesale and retail trade, transport, financial services and public administration supported overall economic performance.

Industrial activity also recovered during the fiscal year. Large-scale manufacturing expanded by 6.11% after contracting in the previous year, while construction activity grew by 5.73%. The recovery in manufacturing reflected improved domestic demand, easing input constraints and better supply conditions.

The survey highlighted that macroeconomic stability improved during the year, supported by fiscal consolidation, exchange rate stability and better external buffers. However, average CPI inflation during July-April FY2026 stood at 6.2%, compared with 4.7% in the same period last year. Inflation rose from 7.3% in March 2026 to 10.9% in April 2026 due to higher global oil prices and supply disruptions linked to the Middle East crisis.

According to the report, stronger external sector performance also supported economic stability. The current account recorded a marginal surplus of $72 million during July-March FY2026. Workers’ remittances rose by 8.2% to $30.3 billion during the same period, remaining a key source of support for the external account.

ICT export remittances also increased during the year, rising by 19.7% to $3.38 billion during July-March FY2026, compared with $2.83 billion in the corresponding period of the previous year. This reflected the growing contribution of the technology sector to foreign exchange earnings.

Private investment expanded by 12.8% during FY2025-26, reflecting improved business confidence and increased spending on productive activities. Total gross fixed capital formation stood at Rs16,071.2 billion, showing a 10.9% increase over FY2025. The survey noted that higher investment levels provide a supportive base for sustaining growth momentum in the coming years.

The agriculture sector, which contributes about 23.4% to national GDP, also supported overall income growth despite the adverse effects of the 2025 floods. The sector grew by 2.89% during 2025-26, compared with 1.53% in the previous year.

Wheat production increased by 4.3% to 29.61 million tonnes, while sugarcane output rose by 6.2% to 89.45 million tonnes and rice production increased by 2.8% to 9.99 million tonnes. The livestock sub-sector expanded by 3.75%, compared with 2.95% in 2024-25, supporting rural incomes and agricultural growth.

Agricultural credit also supported the sector’s resilience. According to the survey, agriculture disbursement by financial institutions is expected to reach Rs3,062 billion in FY2026, which is 19% higher than last year’s disbursement of Rs2,577 billion.

Improvements in education, skills development and digital connectivity are also important for supporting future income growth. The survey notes that Pakistan’s literacy rate improved from 61% in 2022-23 to 63% in 2024-25, while the proportion of out-of-school children declined from 38% in 2023 to 28% in 2025.

Digital skills development also continued to expand. DigiSkills.pk conducted over 5.14 million trainings during July-March FY2026, while freelancers trained under the programme earned approximately $1.65 billion.

Broadband subscribers increased to 161 million by March 2026, while broadband penetration rose to 64.2%. The expansion of digital connectivity is supporting technology adoption, online entrepreneurship and access to digital services.

The report highlights that per capita income growth remains closely linked to productivity improvements, investment, employment generation and human capital development.

According to the survey, Pakistan’s population was estimated at 252.09 million in 2025, making sustained economic growth essential for improving living standards and creating opportunities for a rapidly expanding workforce.

The Ministry of Finance noted that maintaining macroeconomic stability, encouraging investment, strengthening productivity and expanding human capital will remain important for sustaining income growth in the coming years.

With per capita income rising to $1,901 and economic growth broadening across major sectors, FY2025-26 witnessed a modest improvement in average income levels, supported by stronger economic activity and a more stable macroeconomic environment.

Credit: INP-WealthPk