Pakistan GDP Growth Slows to 3.7pc as Economy Shows Modest Recovery

Pakistan’s economy is projected to expand by 3.70 per cent in the current fiscal year, according to fresh government estimates released on Wednesday in Islamabad. The figures show a modest recovery in national output and per capita income, but also confirm that the country is likely to miss its earlier growth target of 4 per cent.

The updated assessment was approved during the 117th meeting of the National Accounts Committee at the Pakistan Bureau of Statistics headquarters. The meeting reviewed quarterly and annual growth numbers for recent fiscal years and endorsed provisional estimates for FY2025-26, giving policymakers a clearer picture of the economy before the next budget cycle.

According to the approved figures, agriculture is expected to grow by 2.89 per cent, industry by 3.51 per cent and services by 4.09 per cent. The services sector remains the strongest contributor to overall expansion, supported by wholesale and retail trade, public administration, education, healthcare, information and communication, and other private services.

The government’s official assessment said Pakistan’s GDP and per capita income had improved in dollar terms compared with the previous year. The size of the economy rose to about $452.1 billion from $410.96 billion, while per capita income increased to $1,901 from $1,824, based on population figures from the 2023 census.

The improvement, however, remains uneven and limited for ordinary citizens. While headline dollar values have moved upward, the broader picture suggests that household purchasing power and living standards remain under pressure after years of inflation, currency weakness and slow income growth.

The quarterly data also showed that growth momentum continued through the fiscal year, with revised expansion of 3.92 per cent in the first quarter and 4.05 per cent in the second quarter. The third quarter was provisionally estimated at 3.99 per cent, while growth for FY2023-24 and FY2024-25 was finalised or revised at 2.62 per cent and 3.18 per cent respectively.

Agriculture presented a mixed performance. Wheat, rice and sugarcane production increased, while maize and cotton declined. Other crops recorded gains due to higher output of grams, potatoes, mangoes, bananas, turmeric and chillies, but cotton-related activity remained subdued because of weaker cotton production.

Industry showed recovery in several areas, particularly large-scale manufacturing, where positive contributions came from food, petroleum products, automobiles, electrical equipment, transport equipment, furniture and football manufacturing. At the same time, mining and quarrying remained weak due to lower natural gas and crude oil production, while electricity, gas and water supply contracted sharply because of base effects and slower energy-sector output.

For Pakistan, the new growth estimates carry major policy implications. The figures suggest that economic stabilisation is gradually taking hold, but the recovery is still not strong enough to significantly lift living standards or reduce pressure on households. The next challenge for the government will be to convert statistical improvement into real income gains, job creation and stronger investment as it prepares budget decisions under a tight reform environment.