Autos, mining power Pakistan’s industrial rebound

June 11, 2026 (MLN): Pakistan's manufacturing and mining sectors are pulsing stronger than ever, driving a powerful economic recovery with a massive 6.6% manufacturing rebound in FY26.

Spearheaded by large-scale industries and a spectacular 61.7% surge in automobile production, alongside a historic turnaround in mining extraction, the nation is successfully reviving domestic industrial demand.

This momentum reflects a highly resilient economy successfully navigating global headwinds to secure long-term expansion.

This comprehensive analysis is drawn directly from Chapter 3 (Manufacturing and Mining) of the officially released Pakistan Economic Survey FY26.

The manufacturing and mining sectors, jointly contributing 13.5% to the GDP, staged a dynamic recovery in FY26.

The manufacturing sector expanded by a remarkable 6.6%, a significant acceleration from the 2.0% growth recorded in the preceding year.

This revival was anchored by Large-Scale Manufacturing (LSM), which accounts for 67.4% of the manufacturing sector.

LSM rebounded forcefully with a 6.1% growth rate, completely erasing the 0.7% contraction experienced last year.

This industrial turnaround was facilitated by a supportive macroeconomic environment, particularly an initial reduction in the policy rate to 10.5% by December 2025, which drastically lowered borrowing costs and improved liquidity before rates were adjusted to 11.5% in April 2026.

Small-Scale Manufacturing maintained its steady momentum with an 8.5% growth, and slaughtering activity grew by 6.2%.

Performance across Large-Scale Manufacturing was highly broad-based, with 16 out of 22 industrial groups recording positive growth.

The food group expanded by 9.8%, driven by a 31% surge in sugar and bakery products.

 The coke and petroleum products segment grew by 10.9% due to elevated demand for high-speed diesel and motor spirit.

The automobile sector was a standout performer, accelerating by 61.7% as passenger car production jumped 51.3% and the two/three-wheeler segment expanded by 31.4%.

 The government introduced the New Energy Vehicle Policy 2025-2030 to sustain this momentum, targeting a 30% market share for new energy vehicles by 2030.

In contrast, the pharmaceutical sector contracted by 5.1%, and iron and steel production declined by 6.3%, signaling targeted operational constraints.

The cement industry demonstrated immense resilience, with total dispatches reaching 38.54 million tonnes, reflecting a 9.7% growth driven by domestic construction demand.

The textile and apparel industry, which forms the backbone of Pakistan’s exports, maintained a relatively stable profile.

Total textile and apparel exports experienced a marginal decline of 0.5%, settling at US$ 13.58 billion during the first nine months of FY26.

The apparel category remained the dominant contributor, accounting for 51% of total textile exports, and recorded a 1.1% increase in value.

Cotton yarn exports also grew by 4.4%, whereas cotton cloth exports faced a 10.9% reduction.

To support the broader industrial base, the Small and Medium Enterprises Development Authority (SMEDA) launched several pivotal initiatives, including the SME Cluster Showcase Expo 2026, the Womenpreneurship Portal, and climate resilience projects aiming to utilize banana waste as a substitute for cotton fiber.

The mining and quarrying sector effectively broke a four-year contracting streak by posting a positive 0.4% growth in FY26.

This recovery was fueled by spectacular extraction increases in specific minerals, including a 164.8% surge in magnesite, a 109.9% increase in rock salt, and a 67.0% rise in gypsum.

Provincial governments implemented aggressive strategies to modernize this sector.

Punjab introduced a Rs 1,540 million financing scheme to promote value addition in Pink Rock Salt, while Sindh focused on rehabilitating its mineral testing laboratories.

 Balochistan deployed advanced Mobile Testing Units and completed the feasibility study for the Siah Diq copper project, and Khyber Pakhtunkhwa established digital joint check posts, successfully auctioning a phosphate block for Rs 2.75 billion.

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