Key Takeaways
- GDP growth for FY26 revised to 3.65% due to industrial and services sector slowdown.
- Per capita income remains lowest in the region at $1,896.
- Economy grows to $450.4 billion, driven by services and industry sectors.
The government of Pakistan has revised the gross domestic product (GDP) growth for the fiscal year 2025-26 (FY26) to 3.65%, down from the initial projection of 3.70% and the earlier estimate of 4%. This downward revision, announced during the 118th meeting of the National Accounts Committee (NAC), reflects a slowdown in the industrial and services sectors.
The country's GDP growth has been modest, with the services sector leading the way, followed by industry and livestock. However, the growth rates in agriculture, industry, and services have been revised to 3.50%, 3.34%, and 3.81% respectively, compared to earlier estimates of 2.89%, 3.51%, and 4.09%.
The downward adjustment in GDP growth indicates that Pakistan has fallen short of its fiscal year target. The International Monetary Fund (IMF), World Bank, and Asian Development Bank have projected GDP growth at 3.6%, 3.7%, and 3.7% respectively for FY26, while the State Bank of Pakistan expects growth to remain close to 3.7%.
The size of the economy has increased to $450.4 billion in FY26 from $410.96 billion in FY25, primarily driven by growth in the services sector. Per capita income has slightly increased to $1,896, the lowest in the region, up from $1,824 in FY25. This increase is based on the 2023 census data.
Despite the growth, the projection is marred by unprecedented inflationary pressures, which have reduced disposable income and limited individuals' ability to afford goods and services, save, or invest. Per capita income has shown a decline from $1,551 in FY23, $1,766 in FY22, and $1,677 in FY21, indicating a deterioration in the standard of living and well-being across almost all segments of society.
The committee also approved updated growth rates for the first three quarters of FY26, at 3.89%, 4.31%, and 4.42%, respectively, compared to the previous estimates of 3.92%, 4.05%, and 3.99%. The fourth quarter of FY26 recorded a 2% growth in GDP.
The NAC also approved the updated annual growth rates for FY25, revised to 3.11% from the previous estimate of 3.18%. Agriculture saw improvements, with important crops like wheat and maize showing a 0.65% increase to 1.59%, and other crops experiencing significant growth, particularly pulses (6.3%), fruits (1.3%), tomato (44%), oilseed (5.4%), and green fodder (2.4%).
