Pakistan's economic growth slows to 2.0% as industry contracts in final quarter
Key Facts
Pakistan's real economic growth slowed to 2.0% year on year in April–June 2026, the final quarter of the fiscal year, according to the Pakistan Bureau of Statistics. The slowdown followed revised growth of 4.42% year on year in January–March, leaving the economy ending the year at a weaker pace than in the preceding quarter. The bureau said the economy recorded "growth of 2.0%", with output remaining above its level in the corresponding period of the previous year. The rate measures real gross domestic product at constant basic prices in the national accounts series, which is not seasonally adjusted. The fiscal year thus ended with continued economic expansion, albeit at a slower pace in its final quarter than in January–March.
The industrial sector's value added contracted by 4.70% year on year in April–June, according to the bureau's quarterly GDP table. Within the sector, value added in electricity, gas and water fell by 33.19% from the same period of the previous year. The decline in these activities was steeper than the contraction in industry as a whole, with a marked difference in the scale of the fall between the industrial aggregate and the utilities group. The sharp contraction covered electricity, gas and water activities combined, marking one of the most prominent areas of sectoral weakness in the final quarter of the fiscal year. Industrial performance was negative during a period in which the country's GDP continued to expand in real terms from its year-earlier level.
By contrast, manufacturing value added grew by 3.14% year on year in April–June, according to the Pakistan Bureau of Statistics' sectoral breakdown. Large-scale manufacturing growth was limited to 0.41% over the same period, a weaker pace than manufacturing as a whole. Construction grew by 3.52% from the corresponding quarter of the previous year, outpacing manufacturing expansion. Manufacturing and construction thus continued to grow in the final quarter despite the contraction in the industrial sector to which they belong. Performance within industry diverged between expansion in these two activities and a decline in utilities, rather than a simultaneous downturn across all industrial activities.
Outside industry, agriculture grew by 3.71% year on year in April–June, according to the Pakistan Bureau of Statistics' accounts for the same period. Services also continued to expand, with value added rising by 3.62% from the corresponding quarter of the previous year. Agricultural growth outpaced services, while both exceeded the overall economy's growth rate in the final quarter. Within services, wholesale and retail trade grew by 0.75% year on year, underperforming the broader sector to which it belongs. Continued expansion in agriculture and services was accompanied by weak trade growth, reflecting uneven activity outside the industrial sector as well.
For the full 2025–2026 fiscal year, the statistics bureau cut its growth estimate to 3.65% from a previous estimate of 3.70%. Pakistan's economy totaled $450.4 billion during the same fiscal year, according to the bureau, with the year ending on slower growth in its final quarter. On fiscal policy, the International Monetary Fund said the budget for the 2026–2027 fiscal year was based on an underlying primary surplus target. The fund set that target at 2.0% of GDP within the budget framework for the new fiscal year. This represents a target for the budget's underlying primary balance as Pakistan continues through reviews of its program with the fund.
The International Monetary Fund announced that it had reached a "staff-level agreement" with the Pakistani authorities on the program review, according to its statement on the review. The fund said the agreement "is subject to approval by the IMF Executive Board", leaving board approval as a necessary step for its completion. On national accounts, the statistics bureau's calendar schedules the next quarterly release for the final week of December 2026. The scheduled release will cover economic activity in July–September 2026, the first quarter of the new fiscal year after the previous fiscal year ended in June. According to the advance release calendar, that will be the next period for which the bureau publishes quarterly GDP results.