GDP size rises to $452bn as Pakistan’s economy gains momentum in FY26

ISLAMABAD: Pakistan recorded a marginal improvement in economic performance during the fiscal year 2025-26, with the economy growing by 3.7 percent amid recovery in manufacturing, construction and services-related activities, according to official estimates.

The National Accounts Committee (NAC) in Islamabad on Wednesday approved the interim national income estimates showing that the country’s economic size increased to $452.1 billion from $410.96 billion a year earlier.

Despite the improvement, the economy remained below the government’s earlier growth target, highlighting the persistent structural and fiscal challenges facing the country.

Officials said that the economic expansion during the fiscal year was mainly supported by improved business activity in the services sector, which grew by 4.09 percent. Wholesale and retail trade, information technology and communication, education, health services and public administration recorded growth.

Industrial growth was estimated at 3.51 percent, supported by a pick-up in large-scale manufacturing. Output increased in several sectors, including automobiles, petroleum products, electrical equipment and food processing.

Construction activity also remained positive during the fiscal year due to higher development spending and a gradual improvement in private sector investment sentiment.

However, the energy sector remained under pressure as electricity, gas and water supply activities contracted sharply due to low subsidies and sluggish output growth.

Agriculture grew by 2.89 per cent with mixed crop performance during the season. Wheat and sugarcane production improved while maize and cotton production were weak. Livestock continued to perform well and contributed significantly to agricultural value addition.

Pakistan’s per capita income increased marginally to $1,901 during FY26. However, economists argued that this increase may not translate into a significant improvement in the standard of living due to inflationary pressures and rising prices of essential goods and services.

The committee also revised upwards its quarterly growth estimates for the first and second quarters of the fiscal year, suggesting that economic conditions have improved more than initially estimated.

Analysts say the latest estimates point to macroeconomic stabilisation after a difficult period of inflation, external financial pressures and subdued industrial activity. However, they caution that sustained policy reforms, export diversification and robust investment in productive sectors will be needed to sustain high growth.