The growth rate of 3.7% was driven by the services sector, followed by growth of 3.5% in industry and 2.9% in the agricultural sector.
ISLAMABAD:
Pakistan’s economy grew by 3.7 percent in the past fiscal year, missing the annual target and dashing hopes of higher growth due to a slowdown in the industrial and construction sectors, which contributed to rising unemployment in the country.
The growth rate of 3.7% was driven by the services sector, followed by growth of 3.5% in industry and 2.9% in the agricultural sector.
The country’s per person income rose to $1,901 due to increased foreign remittances, stronger economic growth and a largely stable exchange rate. The size of its economy reached $452.1 billion in fiscal year 2025-2026, becoming the 42nd largest economy in the world.
The National Accounts Committee, the body responsible for approving economic growth rates, approved the provisional economic growth based on data from the first three quarters of the financial year. He also approved the per capita figures.
The 117th meeting of the National Accounts Committee (NAC) was held on Wednesday, chaired by Planning Secretary Awais Manzur Sumra.
According to details released by the Ministry of Planning, the government failed to achieve the economic growth target of 4.2%, as the economy grew by 3.7%.
The provisional growth rate is not only lower than the official target, but is also lower than estimates by the State Bank of Pakistan, which projects growth of up to 4.8 percent this fiscal year. However, this was close to the forecasts of the International Monetary Fund and the Asian Development Bank.
For four years, Pakistan has been implementing economic stabilization policies that have weighed heavily on national production and contributed to worsening poverty, unemployment and income inequality.
For the next financial year 2026-27, the government has already committed to the IMF to continue the path of stabilization and has made a written commitment to produce a primary budget surplus of Rs 2.8 trillion.
According to the Ministry of Planning, the overall size of the economy stands at 126.9 trillion rupees, or $452.1 billion in dollar terms. With $452 billion, Pakistan ranks 42nd in the world.
Based on population projections from the 2023 census, the per capita income is Rs 533,629, which is Rs 44,511 more than last year. In dollar terms, income per person increased by $150 to $1,901 over the past fiscal year, according to the Planning Ministry.
The committee revised upwards the quarterly GDP growth rates for the first and second quarters and approved the third quarter growth rate of 4% for the outgoing fiscal year.
Agriculture
Provisional growth rates for the agricultural sector remained at 2.9 percent, better than last year’s 1.53 percent, according to the ministry. In agriculture, important crops posted a modest growth of 0.7% due to a mixed trend in the production of wheat, corn, rice, sugarcane and cotton.
Wheat production increased to 29.6 million tonnes from 28.4 million tonnes last year, showing a growth of 4.6%. Rice production jumped to 10 million tonnes from 9.7 million tonnes last year, a growth of 2.8%.
Sugarcane showed a growth of 6.2% during 2025-26 with production of 89.5 million tonnes compared to 84.2 million tonnes last year.
However, the cotton crop saw a contraction of 0.5% to 7.1 million bales. Corn production also fell by 2.7% to 8.8 million tonnes, compared to 9.1 million tonnes last year.
Despite a strong growth of 19.74 per cent in the previous year, other crops showed a growth of 2.43 per cent due to strong growth in grams, potatoes, mangoes, bananas, turmeric and chillies, according to the ministry.
Livestock increased by 3.75% from 3% due to the increase in production by 3.5% and the decrease in green fodder. Forestry and fishing recorded normal growth rates.
Industry
The industry, in 2025-26, showed a provisional growth of 3.51%, which is significantly lower than the previous year. The sector is suffering badly due to high taxation, high energy prices, borrowing costs and economic policy uncertainty.
Despite an increase in coal production, the mining and quarrying industry recorded a modest growth of 0.4% due to a decrease in the production of natural gas, crude oil and other minerals.
The large-scale manufacturing industry grew by 6.11% with a mixed trend in the production of various groups, mainly due to the positive contribution of the food, tobacco, petroleum products, rubber products, electrical equipment, automobiles, transportation equipment, furniture and football sectors.
However, the decline in production of the electricity, gas and water industry and the slow growth of the construction sector have dampened the overall growth of the sector, which contributes the maximum to taxes and is the second largest job-creating sector.
Electricity and gas production contracted by 10.63%, mainly due to a high base effect, lower energy subsidies and slower growth in WAPDA and corporate production. Compared to growth of 8.8% over the last year, the construction sector grew by 5.7% due to increased construction-related spending by the private sector and public administrations, according to the Planning Ministry.
Subsidies fell by 25%, from 1.2 trillion rupees to 893 billion rupees.
Services
The services sector showed growth of 4.1% in the past fiscal year, with positive contributions from wholesale and retail trade, transportation and storage, information and communication, public administration, social security and education.
