Pakistan's economy grew 3.7 percent in the outgoing fiscal year, driven by the services sector, with per capita income increasing to $1,901 due to higher foreign remittances and stable exchange rates.
Pakistan's economy has grown 3.7 percent in the outgoing fiscal year, falling short of the annual target of 4.2 percent. The growth rate was primarily driven by the services sector, which expanded 4.1 percent, followed by the industry sector with a growth rate of 3.5 percent, and the agriculture sector with a growth rate of 2.9 percent. The nation's per capita income has increased to $1,901, largely due to higher foreign remittances, stable exchange rates, and moderate economic growth.
The size of Pakistan's economy has reached $452.1 billion in the fiscal year 2025-26, making it the 42nd largest economy in the world. The National Accounts Committee, which is responsible for approving economic growth rates, has approved the provisional economic growth based on data from the first three quarters of the fiscal year. The committee also approved the per capita income figures, which have increased by $150 to $1,901 in the outgoing fiscal year.
The government has missed its economic growth target, and the provisional growth rate is lower than the State Bank of Pakistan's estimates of up to 4.8 percent growth in this fiscal year. However, it is close to the predictions of the International Monetary Fund and the Asian Development Bank. Pakistan has been implementing economic stabilization policies for the past four years, which have taken a heavy toll on the national output and contributed to increased poverty, unemployment, and income inequality.
The agriculture sector has shown modest growth, with important crops such as wheat, rice, and sugarcane posting increases in production. The production of wheat increased to 29.6 million tons, while rice production jumped to 10 million tons. Sugarcane production also posted a growth of 6.2 percent, with a production of 89.5 million tons. However, the cotton crop witnessed a contraction of 0.5 percent to 7.1 million bales. The livestock sector has increased by 3.75 percent, driven by an increase in output and a decrease in green fodder.
The industry sector has shown a growth of 3.51 percent, which is significantly lower than the previous year. The sector is suffering due to high taxation, high energy prices, and uncertain economic policies. The mining and quarrying industry has posted a modest growth of 0.4 percent, despite an increase in coal production. Large-scale manufacturing has witnessed a growth of 6.11 percent, driven by positive contributions from food, tobacco, petroleum products, and electrical equipment. However, the decline in electricity and gas output has contracted by 10.63 percent, primarily due to a high base effect and lower energy subsidies.
The services sector has shown a growth of 4.1 percent, driven by positive contributions from wholesale and retail trade, transport and storage, information and communication, public administration, and social security and education. The construction industry has increased by 5.7 percent, driven by an increase in construction-related expenditures by the private sector and general government. Overall, Pakistan's economy is facing challenges, and the government needs to implement policies to boost growth, reduce poverty, and increase employment opportunities.
