ISLAMABAD: Pakistan’s economy expanded 3.7 percent in the first quarter of fiscal year 2025-26, signaling a rebound driven by robust industrial activity, federal planning minister Ahsan Iqbal said Tuesday. Industrial output grew 9.38 percent in July-September, a sharp turnaround from near stagnation a year ago, underscoring the sector’s role in the early recovery. The growth comes amid challenges including devastating monsoon floods, fiscal tightening, energy subsidy withdrawal and rising food prices. The GDP growth in the first quarter of the current fiscal year rose 3.7 percent, up 2.15 percentage points from 1.56 percent in the same period last year
The growth in first quarter of the current fiscal was 2.15 percentage points more than same quarter of the previous fiscal when the expansion was only 1.56 percent.
The quarter’s expansion, while modest, has fueled policy moves such as a 50-basis-point cut in the central bank’s key interest rate to 10.5 percent, aimed at stimulating demand in a fragile economy that narrowly avoided default last year.
Heavy floods in 2025 affected roughly 7.7 percent of cropped land, damaging rice and sugarcane fields and displaced three million people, leaving over 1,000 dead.
The World Bank forecasts Pakistan’s economy will grow three percent in the year ending June, below the central bank’s projection of more than four percent, reflecting ongoing challenges in agriculture and consumer demand.
Meanwhile, the National Accounts Committee (NAC) approved fresh growth estimates signaling early momentum after a sluggish year. It also slightly revised upward the country’s economic growth for FY2024-25 to 3.09 percent, from 3.04 percent approved earlier, citing modest improvements in industry and services.
Industrial output emerged as the main driver in the July-September quarter, expanding 9.38 percent compared with near stagnation a year earlier (0.12 percent). Large-scale manufacturing grew 4.10 percent, led by food products, automobiles, which surged 84.6 percent, transport equipment 40.7 percent and non-metallic mineral products output up by 13.86 percent. Electricity, gas and water supply jumped 25.46 percent, while construction activity rose on the back of a 15.32 percent increase in cement production.
Agriculture posted a moderate growth of 2.89 percent, though key segments struggled. Important crops declined 0.75 percent, while other crops fell 6.37 percent, largely due to lower green fodder output, underscoring persistent vulnerabilities in the sector.
Services grew 2.35 percent, slightly faster than last year 2.24 percent. Wholesale and retail trade showed steady expansion of 3.08 percent, transport and storage industry 3.16 percent, while finance and insurance rose 10.36 percent and public administration increased 8.08 percent. Information and communication, however, contracted sharply due to lower revenues reported by mobile companies, despite rising IT exports.
Based on revised national accounts, Pakistan’s economy is now valued at Rs113.93 trillion ($407.9 billion), with per capita income estimated at $1,814. Population-adjusted income figures will be revised once updated census projections are finalised.
