Pakistan’s economy achieved a growth rate of 3.7 percent during the fiscal year 2025-26, falling short of the 4.2 percent target set for the period. Despite this shortfall, the overall economy expanded notably, driven by improvements in nominal output and varied sectoral performances.
The gross domestic product (GDP) increased by 11.3 percent in rupee terms, reaching Rs126.9 trillion. When measured in U.S. dollars, the economy grew by USD 43.9 billion, reaching USD 452.1 billion compared to USD 408.2 billion in the previous fiscal year.
Per capita income also improved, rising by USD 150 to USD 1,901 from USD 1,751 last year. In local currency terms, per capita income climbed to Rs533,629 from Rs489,118, indicating a steady enhancement in average income levels.
Sectoral performance showed a mixed picture during the year. The social sectors performed well, with education growing by 5.23 percent, surpassing its 4.5 percent target. Health and social services also exceeded expectations, expanding by 6.86 percent against a 4 percent goal.
Conversely, agriculture faced challenges, registering growth of only 2.89 percent compared to the 4.5 percent target. Major crops grew marginally by 0.65 percent, far below the 6.7 percent objective. Cotton ginning was nearly stagnant at 0.07 percent, while livestock growth stood at 3.75 percent, slightly under the anticipated level. Forestry and fisheries also underperformed, growing at 2.02 percent and 1.66 percent respectively.
The industrial sector showed partial recovery with growth of 3.51 percent, just under its 4.3 percent target. Mining and quarrying experienced weak expansion at 0.38 percent, well below expectations. Manufacturing was a key growth driver, increasing by 6.61 percent against a 4.7 percent target. Large-scale manufacturing expanded by 6.11 percent, and small-scale industries grew by 8.50 percent, close to but slightly below target. Slaughtering activities also posted strong growth at 6.19 percent.
However, the electricity, gas, and water supply sector contracted sharply by 10.63 percent, missing its positive growth target of 3.5 percent and dampening overall industrial performance. Construction remained relatively robust, growing by 5.73 percent.
The services sector maintained stability with growth of 4.09 percent, marginally exceeding its 4 percent target. Wholesale and retail trade grew by 3.71 percent, slightly under projections, while transport and storage expanded by 2.31 percent, falling short of expectations. Hotels and restaurants grew by 3.94 percent, and information and communication emerged as a strong performer with growth of 7.52 percent, surpassing targets. Financial and insurance services grew sluggishly at 0.3 percent against a 5 percent goal, and real estate activities also lagged, growing by 3.63 percent.
Overall, the data reflects a broadly steady but uneven economic recovery. Strong performances in manufacturing and services have been offset by weaknesses in agriculture and the energy-related sectors. Despite improvements in key macroeconomic indicators such as GDP size and per capita income, structural challenges continue to pose obstacles to sustained growth momentum in Pakistan’s economy.
