FY2025-26: Pakistan’s economy grows 3.7pc, GDP size rises to Rs126.9tr

ISLAMABAD: Pakistan’s economy recorded an interim growth rate of 3.7 per cent in the outgoing fiscal year 2025-26, falling short of the 4.2 per cent target, according to the Pakistan Economic Survey 2025-26. Despite missing the growth target, the overall size of the economy expanded significantly, reflecting improvements in nominal output and sectoral performance.

According to official data, the country’s gross domestic product (GDP) grew by 11.3 per cent in rupee terms, reaching Rs126.9 trillion. In dollar terms, the economy expanded by USD43.9 billion to USD452.1 billion, compared to USD408.2 billion in the previous fiscal year.

Per capita income also showed an increase of USD150, rising to USD1,901 from USD1,751 last year. In rupee terms, per capita income stood at Rs533,629, compared to Rs489,118 in the preceding year, indicating gradual improvement in average income levels.

Sectoral performance mixed across economy

The Economic Survey highlighted a mixed performance across key sectors, with some areas outperforming targets while others lagged behind.

In the social sectors, education posted strong growth of 5.23 per cent, exceeding its 4.5 per cent target. Health and social services also performed well, growing by 6.86 per cent against a target of 4 per cent.

Agriculture, however, remained under pressure, registering growth of 2.89 per cent against a target of 4.5 per cent. Within agriculture, major crops grew by just 0.65 per cent, significantly below the 6.7 per cent target. Cotton ginning showed near stagnation at 0.07 per cent, while livestock recorded 3.75 per cent growth, slightly below expectations. Forestry and fisheries also underperformed, growing at 2.02 per cent and 1.66 per cent respectively.

Industry shows partial recovery

The industrial sector posted growth of 3.51 per cent, slightly below its 4.3 per cent target. Mining and quarrying recorded weak growth of 0.38 per cent, far short of expectations.

Manufacturing emerged as a key driver, growing 6.61 per cent against a 4.7 per cent target. Large-scale manufacturing expanded by 6.11 per cent, while small-scale industries grew by 8.50 per cent, close to but slightly below target. Slaughtering activities also showed strong growth at 6.19 per cent.

However, electricity, gas and water supply contracted sharply by 10.63 per cent, missing its positive growth target of 3.5 per cent, weighing on overall industrial performance. Construction remained relatively strong, posting 5.73 per cent growth.

Services sector remains stable

The services sector grew by 4.09 per cent, marginally above its 4 per cent target. Wholesale and retail trade expanded by 3.71 per cent, slightly below projections. Transport and storage grew by 2.31 per cent, underperforming its target.

Hotels and restaurants recorded growth of 3.94 per cent, while information and communication emerged as a strong performer at 7.52 per cent, surpassing expectations. Financial and insurance services, however, grew by only 0.3 per cent against a 5 per cent target. Real estate activities also remained below target, growing at 3.63 per cent.

Overall outlook

The Economic Survey data reflects a broadly stable but uneven economic recovery, with strong performance in manufacturing and services offset by weaknesses in agriculture and energy-related sectors. While key macro indicators such as GDP size and per capita income improved, several structural challenges continue to weigh on sustained growth momentum.

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