Pakistan economy grows 3.65% in FY26, fastest pace in four years

Pakistan’s economy grew 3.65% in the fiscal year ended June 30, 2026, marking its fastest annual expansion in four years, according to updated estimates approved by the National Accounts Committee and released by the Pakistan Bureau of Statistics.

The figure was revised from the previous estimate of 3.7%. The NAC put the size of the economy at PKR 126.4 trillion, or USD 450.4 billion, with per capita income at USD 1,896.

Growth slowed to 2% in the fourth quarter, the weakest pace in six quarters and below the average 4.21% expansion recorded during the preceding three quarters, Topline Research said in an October 19 report.

The NAC revised first-quarter growth to 3.89%, second-quarter growth to 4.31% and third-quarter growth to 4.42%.

The full-year estimate was broadly in line with Topline’s expectations but below the State Bank of Pakistan’s projected range of 3.75% to 4.75% and the government’s previous 3.7% estimate.

The committee also revised fiscal 2025 growth down to 3.11% from 3.18%, primarily because agricultural growth was lowered to 1.32% from 1.53%.

Why did Pakistan’s growth slow in the fourth quarter?

Economic growth eased to 2% in the final quarter as industrial activity contracted 4.7%, despite continued expansion in manufacturing. Value added in electricity, gas and water supply fell sharply by 33.2%, weighing on industry, while agriculture and services continued to record positive growth.

Manufacturing activity grew 3% during the quarter, while small-scale manufacturing expanded 9.5% and mining and quarrying increased 8.9%, according to Topline.

The brokerage said the sharp contraction in electricity, gas and water supply reflected a high base from the corresponding quarter a year earlier, when the segment had recorded growth of about 123% following adjustments related to solar-power data in the calculation methodology.

For the full fiscal year, industry expanded 3.34%, supported by 6% growth in overall manufacturing, including large-scale manufacturing, small-scale manufacturing and slaughtering activities.

Construction grew 6.3%, while electricity, gas and water supply contracted 10.2%.

Agriculture and services support annual growth

Agriculture grew 3.5% in fiscal 2026, supported by 1.59% growth in important crops and 4.3% growth in other crops. The official annual agriculture figure was revised up from the earlier estimate of 2.89%.

The sector expanded 3.7% in the fourth quarter, with forestry growing 15%, important crops 2.2% and other crops 2.6%, according to Topline.

Services grew 3.81% during the fiscal year, their strongest performance in four years. Information and communication services led with 9.53% growth, while public administration and social security expanded 5.67%.

Information and communication activities grew 15% in the fourth quarter, while human health and social work activities expanded 6.1%, according to Topline.

Topline expects 3.5%-4% growth in FY27

Topline Research expects Pakistan’s economy to grow between 3.5% and 4% in fiscal 2027.

Agriculture is projected to expand between 4% and 4.5%, while both industry and services are expected to grow between 3.5% and 4%.

The outlook points to a moderate recovery, with the pace of expansion depending on improvements in industrial activity and sustained growth across agriculture and services.