ISLAMABAD: Pakistan’s economy grew by 3.89 per cent in the October-December quarter of 2025-26, showing an increase from 2.18pc recorded in the same period last year.
The economy also recorded a slight improvement compared to the revised 3.63pc expansion in the first quarter (July-September), despite a slight slowdown in the growth of the agriculture and industrial sectors, according to data released by the National Accounts Committee (NAC) on Thursday.
The services sector posted a slight improvement over the first quarter, partly offsetting the deceleration observed in the other two sectors.
The year-on-year quarterly growth was mainly driven by a 7.40pc increase in the industrial sector, followed by 1.76pc growth in the agriculture sector and 3.69pc in the services sector. The combined performance of these three key sectors contributed slightly to the overall economic expansion during the quarter.
Industrial, services sectors drive growth despite agriculture slowdown
The NAC slightly revised the GDP growth to 3.63pc in Q1FY26, down from the earlier 3.71pc. It finalised GDP growth at 2.62pc in FY24, slightly lower than the previous estimate of 2.63pc, and the revised growth for FY25 is 3.06pc, down slightly from the earlier estimate of 3.09pc.
The State Bank of Pakistan (SBP) expects GDP to grow at 4pc for FY26. The World Bank projection is slightly below the SBP at 3pc by the end of June 2026. However, the government has projected a 4.2pc expansion in FY26, a target that seems ambitious.
The 115th meeting of the NAC, chaired by the Planning Commission secretary, took place on Thursday at the Pakistan Bureau of Statistics headquarters. The meeting approved the updated annual growth rates for FY25.
The analysis of the second quarter showed that the agriculture sector grew by 1.76pc in Q2 compared to the same period last year. Important crops have shrunk by 1.87pc in Q2, mainly due to a decline in cotton production (-0.9pc) and increases in inputs such as seeds (6pc) and fertiliser (7.2pc).
Other crops contracted by 5.69pc compared to 19.14pc last year, driven by falling green fodder production (-12.8pc) and higher input use. Livestock increased by 5.59pc versus 5.56pc last year because of a decrease in input costs. The forestry and fishing industries are growing by 3.76pc and 0.77pc, respectively, maintaining their usual growth trends.
The industry sector has witnessed growth of 7.40pc, compared with 0.78pc last year. The analysis shows that the mining and quarrying industry is experiencing negative growth of -2.46pc due to declines in production of gas (-3.98pc), marble (-10.68pc), limestone (-8.35pc), and other minerals (-5.91pc).
Large-Scale Manufacturing (LSM) growth is driven by QIM, which grew 5.71pc in Q2 of 2025-26. Major contributors have been Automobiles (52.95pc), transport equipment (40.81pc), and petroleum products (24.65pc). A growth of 15.11pc has been reported in electricity, gas, and water supply, driven by an increase in the quarterly subsidies (from Rs217 billion to Rs323 billion) and a decline in the CPI electricity deflator (from 283.60 to 256.41).
The construction industry, estimated to have grown by 10.53pc, is based on output indicators. Production of cement increased by 8.44pc during Q2FY26 compared to the same quarter last year.
The services industry grew by 3.69pc in Q2 of 2025-26 compared to 2.80pc in Q2 of the previous year. Wholesale and retail trade increased by 4.46pc, driven by growth in agriculture (2pc), manufacturing (6.1pc), and imports (1.3pc).
The transport and storage sector expanded by 2.79pc, up from 2.68pc during the same period last year, mainly supported by higher output in road transportation, including trucks, buses and wagons.
Published in Dawn, April 3rd, 2026
