Pakistan's economic growth slows, key sectors face setbacks in first half

The Pakistani economy recorded slower growth in the agriculture sector and contraction in the industrial sector during the first six months of the current fiscal year.

The National Accounts Committee on Wednesday approved the economic data and reported that the economy grew by 1.73% in the second quarter of fiscal year 2024-25. Growth figures for agriculture, industry, and services stood at 1.10%, -0.18%, and 2.57%, respectively.

During the second quarter, crop production contracted by 5.38%. The 7.65% contraction in major crops was attributed to reduced output in cotton (-30.7%, from 10.22 million to 7.084 million bales), maize (-15.4%, from 9.74 million to 8.24 million tons), rice (-1.4%, from 9.86 million to 9.72 million tons), and sugarcane (-2.3%, from 87.64 million to 85.62 million tons).

Wheat production, which did not impact the quarter, showed a 6.8% decline in cultivated area compared to last year. The high base of 2023-24 also contributed to the decline in major crop growth.

However, other crops recorded modest growth of 0.73%, driven by a 14.2% increase in potato cultivation area.

Livestock expanded by 6.51%, compared to 2.96% growth in the second quarter last year, mainly due to a lower base and reduced intermediate consumption, such as dry and green fodders. Forestry declined by 0.64% due to reduced production in Khyber Pakhtunkhwa, while the fishing industry grew modestly by 0.79%.

The updated GDP growth for the first quarter of FY 2024-25 was revised to 1.34%, up from the earlier estimate of 0.92%. The revised agricultural growth fell to 0.74% from 1.15%, primarily due to downward revisions in other crops (from 2.08% to 0.43%), following a 1.9% decrease in green fodder production, and in forestry (from 0.78% to -2.07%).

The industrial sector's contraction eased, moving from -1.03% to -0.66%, driven by improvements in electricity, gas, and water supply (up from 0.58% to 1.37%) and in construction (from -14.91% to -11.71%).

Mining and quarrying saw further downward revisions, from -6.49% to -8.06%, due to declines in coal production (-2.08%), limestone (-8.01%), and other minerals (-5.47%).

Despite downward revisions in finance and insurance (from 1.14% to -0.28%), improved performance in transport (from -0.07% to 0.16%), public administration and social security (from -4.49% to 4.40%), education (from 2.03% to 4.76%), and health (from 5.60% to 6.70%) contributed to the overall growth of the services sector, which was revised upward from 1.43% to 2.21%.