Pakistan GDP growth ‘defies expectations’; jumps to 3%

Pakistan’s GDP growth for fiscal year 2025 has been revised upward from an earlier estimate of 2.68% 3.04%, according to figures approved by a national committee overseeing economic planning.

The revised estimates, released on Wednesday, came as the World Bank trimmed Pakistan’s economic growth forecast for the fiscal year 2025-26 to 2.6%, a 0.5 percentage point cut from its earlier projection of 3.1% in June, citing catastrophic floods and growing inflationary pressures.

Even Pakistan officials, during recent discussions with the representatives of the International Monetary Fund (IMF), proposed a downward revision of the GDP growth target from 4.2% to 3.5% due to flood-related disruptions in agriculture.

The numbers shared by the Pakistan Bureau of Statistics (PBS) show growth across all major sectors — agriculture, industry, and services — reflecting improvements in crop production, manufacturing, and trade activity.

The agriculture sector’s growth is now calculated to be 1.51%, compared to the previous 0.56%. While important crops remained in the red, they improved slightly from a contraction of 13.49% to 13.12%. Other crops showed robust gains, with output growing by 19.55%, driven by double-digit increases in green fodder (16%), vegetables (12%), fruits (10%), and tobacco (25.7%).

Livestock growth slowed from 4.72% to 2.94% due to rising input costs. Forestry and fishing registered modest gains at 2.66% and 1.40%, respectively.

The industrial sector is now projected to grow 5.26%, up from 4.77%. The mining and quarrying segment narrowed its decline from 3.38% to 2.35% on the back of improved outputs in oil (3.5%), limestone (31.6%), marble (11.6%), and exploration costs (26.1%).

Large-scale manufacturing showed improvement, with the Quantum Index of Manufacturing (QIM) reflecting a smaller contraction of 0.69% compared to 1.53% previously. Growth was recorded in several industries, including automobiles (46.15%), transport equipment (36.6%), textiles (2.49%), and pharmaceuticals (2.74%). However, declines persisted in food manufacturing (1.83%), chemicals (2.46%), and iron and steel products (8.7%).

Electricity, gas, and water supply slipped slightly to 28.53% from 28.88%, while construction saw a minor uptick from 6.61% to 6.63% due to increased provincial spending.

The services sector also saw a marginal improvement, now expected to grow at 3%, up from 2.91%. Wholesale and retail trade rose to 0.46%, driven by improvements in agriculture, manufacturing, and imports. Transport and storage also increased to 2.43%, with stronger performance from airlines, ports, and logistics companies.

Finance and insurance grew from 3.22% to 3.90% amid gains in the insurance industry.

However, information and communication dipped to 5.85% from 6.48%. Other service components — including public administration, education, health, and private services — remained positive despite minor downward revisions.

The revised national accounts put the size of Pakistan’s economy at PKR 113.7 trillion ($ 407.2 billion), up from PKR 105.2 trillion ($ 371.8 billion) the previous year. The per capita income now stands at PKR 506,188 ($1,812), although officials noted that a revised population estimate based on the 2023 census may affect this figure.

Fourth quarter report card

The economy has posted a stable growth of 5.66% during the fourth quarter (April-June) of FT2025.

The growth in the agriculture, industry, and services sectors stood at 0.18%, 19.95% and 3.72%, respectively.

In agriculture, although important crops have declined by 17.55%, other crops grew by 17.99% due to double-digit growth in production of green fodder (14.2%), onions (12.6%), and mangoes (26.4%).

Livestock (1.44%), forestry (3.60%), and fishing (2.23%) have also registered positive growth rates during Q4.

Contrary to the first three quarters, the industry has posted a healthy growth of 19.95% as compared to -3.06% during the same period last year.

Although all the constituents of industry have contributed positively — mining and quarrying 1.94% and large-scale manufacturing 2.96% — the electricity, gas & water supply industry posted an overwhelming growth of 121.38% due to higher subsidies, decline in deflators as well as low base effect of -31.59%.

The construction industry also contributed positively, with a growth of 17.65% due to higher production of cement as well as higher government spending on infrastructure.

The overall growth in services was 3.72% during Q4 with all the constituents contributing positively i.e. wholesale & retail trade (2.08%), transportation & storage (4.06%), information and communication (3.13%), finance & insurance activities (6.81%), public administration and social security (12.87%), education (3.71%), health & social work (2.51%) and other private services (3.03%).