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–GDP growth for Q1 FY26 was revised down while key sectors showed weakening momentum despite a modest pickup in Q2
Aftab Maken
ISLAMABAD: An economic growth outlook showed emerging weaknesses as the National Accounts Committee revised down first-quarter expansion and reported only moderate gains in the second quarter of FY2025-26.
The committee said GDP growth for Q1 was cut to 3.63% from an earlier estimate of 3.71%, reflecting downward revisions in agriculture and industry, two critical sectors of the economy. Agriculture growth was reduced to 2.72% from 2.89%, while industry was revised down to 8.86% from 9.38%, highlighting underlying fragility in productive sectors.
Although the economy grew 3.89% in Q2, the expansion was largely driven by industry, which posted a strong 7.40% increase. However, this masked continued stress in agriculture, where growth remained subdued at 1.76%, raising concerns over rural income and food security.
The agriculture sector faced contraction in key crop segments, with important crops shrinking by 1.87% in Q2 amid falling cotton output and rising input costs. Seed prices rose 6.0% while fertilizer costs increased 7.2%, squeezing farmer margins and contributing to declining crop performance.
Industry growth, while relatively strong in Q2, was uneven and partly supported by low base effects. Mining and quarrying continued to contract by 2.46%, reflecting declines in gas, marble, and limestone production. This suggests structural weaknesses in extractive industries despite gains in manufacturing.
Large-scale manufacturing grew 5.71%, supported by automobiles and petroleum products, but the pace remains vulnerable to demand fluctuations and import constraints. Construction growth, revised down earlier, also indicates slowing momentum despite a 10.53% rise in Q2.
Services, which form the largest share of the economy, grew 3.69% in Q2, showing only gradual improvement. Wholesale and retail trade expansion relied partly on imports, while transport and storage gains remained modest, pointing to limited domestic demand recovery.
Annual growth figures were also revised slightly downward, reinforcing concerns over medium-term economic stability. GDP growth for FY2023-24 was adjusted to 2.62% from 2.63%, while FY2024-25 was revised to 3.06% from 3.09%, reflecting weaker-than-expected sectoral performance.
Economists say repeated downward revisions signal data volatility and persistent structural challenges. According to the State Bank of Pakistan, sustainable growth remains constrained by low productivity, energy shortages, and external sector pressures.
Pakistan’s economy has struggled to maintain consistent growth above 4% in recent years, with periodic slowdowns linked to fiscal tightening and IMF-backed reforms. The latest data suggests that while short-term recovery is underway, it lacks broad-based strength across sectors.
Rising input costs, weak agricultural output, and contraction in mining highlight risks to future growth. Analysts warn that without structural reforms and investment in productivity, the economy may struggle to accelerate beyond current levels.
The latest figures also come at a time when Pakistan is navigating macroeconomic stabilization measures, including tight monetary policy and fiscal consolidation. These measures, while necessary, may continue to weigh on growth in the near term.
With agriculture under pressure and industrial growth uneven, the outlook remains fragile. Policymakers will need to focus on boosting exports, improving productivity, and stabilizing key sectors to sustain recovery momentum.
The evolving growth trajectory will remain closely tied to policy direction and external conditions, as National Accounts Committee signals a cautious outlook for Pakistan’s economy.
