Pakistan’s economy expands 3.71% in Q1FY26

December 31, 2025 (MLN): Pakistan’s economy registered a notable acceleration in the first quarter of fiscal year 2025-26, with Gross Value Added (GVA) growing 3.71% year-on-year, according to the latest Quarterly National Accounts (QNA) released by the Pakistan Bureau of Statistics (PBS).

The estimates, approved by the 115th National Accounts Committee (NAC) on December 30, 2025, also incorporate revisions to all four quarters of FY25, reflecting updated data from public and private sector sources.

The improvement in overall economic performance marks a clear turnaround from 1.56% growth recorded in the same quarter last year.

The recovery was largely driven by a sharp rebound in industrial activity, while services maintained moderate expansion and agriculture showed gradual improvement.

Quarterly GDP Growth by Sector (%)

Source: QNA Q1FY26

The summary data shows that industry emerged as the principal growth engine, lifting overall GDP growth.

Services continued to provide stability, while agriculture, despite structural weaknesses, posted a better performance compared to last year’s low base.

Agriculture recorded 2.89% growth in Q1 FY26, nearly tripling from last year’s 1.01%. However, this improvement was uneven across sub-sectors.

Crop production remained under pressure, with the crops sub-sector contracting by 3.65%, largely due to continued weakness in cotton output and declining performance of other crops.

Important crops showed marginal improvement compared to last year but remained in negative territory, while cotton ginning suffered a sharper contraction, reflecting lower cotton arrivals.

Despite this, livestock provided strong support to agricultural growth, expanding 6.29%, significantly higher than the previous year.

The increase was primarily attributed to a decline in input costs, particularly green fodder prices, which improved margins for livestock producers.

Forestry and fishing sectors recorded modest growth, maintaining their historical trends.

Agriculture Sector Growth (%)

Source: QNA Q1FY26

The industrial sector delivered a robust 9.38% expansion, a sharp reversal from near stagnation a year earlier.

Manufacturing growth strengthened to 5.78%, supported by recovery in both large-scale and small-scale manufacturing.

Large-scale manufacturing turned positive after contraction last year, with strong contributions from automobiles, transport equipment, food products, non-metallic mineral products and rubber-based industries, although machinery and equipment continued to lag.

Construction activity emerged as a major driver, growing 21.03%, underpinned by a significant increase in cement production and improved performance across key construction indicators.

Energy-related industries also posted exceptional growth, as electricity, gas and water supply expanded 25.46%, reflecting higher output from power companies, a substantial increase in government subsidies, and a decline in electricity price deflators.

In contrast, mining and quarrying remained in contraction, reflecting lower production of gas, crude oil, limestone and other minerals.

Industrial Sector Growth (%)

Source: QNA Q1FY26

The services sector recorded 2.35% growth, broadly stable compared to the same quarter last year, though underlying performance varied significantly across segments.

Wholesale and retail trade showed improvement, benefiting from stronger agricultural and manufacturing output.

Transport and storage activity also strengthened, supported by higher production of commercial vehicles and lower price deflators.

Accommodation and food services continued their steady upward trend, while finance and insurance rebounded sharply from last year’s contraction, reflecting improved financial sector performance.

Public administration and social security posted strong growth, driven by revised government budget data across federal, provincial and local governments.

Education and health services also expanded at a faster pace, supported by updated information from the private sector and the budget.

However, the information and communication sector experienced a sharp contraction of 28.70%, primarily due to a decline in the output of mobile telecommunications companies, which weighed on overall services growth.

Services Sector Growth (%)

Source: QNA Q1FY26

Overall, the Q1 FY26 figures suggest that Pakistan’s economic recovery is increasingly being powered by industry and public-sector-driven services, while agriculture continues to face structural challenges, particularly in crop production.

The sustainability of this momentum will become clearer with the release of Q2 FY26 estimates, scheduled for the last week of March 2026, PBS said.

Copyright Mettis Link News