Economy grows 3.7pc as per capita income rises to $1,901

ISLAMABAD: Pakistan’s economy expanded by 3.7 per cent in the outgoing fiscal year, falling short of the official target of 4.2 per cent, while per capita income increased to $1,901, according to figures approved by the National Accounts Committee.

The 117th meeting of the National Accounts Committee (NAC) was held on Wednesday under the chairmanship of Planning Secretary Awais Manzur Sumra. The committee approved provisional economic growth estimates based on data for the first three quarters of fiscal year 2025-26 and also cleared the per capita income figures.

According to details issued by the Planning Ministry, the economy grew by 3.7 per cent, below both the government’s annual target and the State Bank of Pakistan’s estimate of up to 4.8 per cent for the fiscal year. The outcome was, however, close to projections made by the International Monetary Fund and the Asian Development Bank.

The ministry said the services sector was the main driver of growth, posting 4.1 per cent expansion. Industry grew by 3.51 per cent, while agriculture recorded 2.9 per cent growth.

Pakistan’s economy reached Rs126.9 trillion in size, which the Planning Ministry said was equal to $452.1 billion. At that level, Pakistan ranked as the world’s 42nd largest economy. Based on population projections from the 2023 census, per capita income stood at Rs533,629, up by Rs44,511 from the previous year. In dollar terms, per person income rose by $150 to $1,901. The ministry attributed the increase to higher remittances, stronger economic growth and a largely stable exchange rate.

Agriculture performance

The agriculture sector’s provisional growth rate remained at 2.9 per cent, improving from last year’s 1.53 per cent, according to the ministry. Important crops posted modest growth of 0.7 per cent amid mixed output trends in wheat, maize, rice, sugarcane and cotton.

Wheat production increased to 29.6 million tons from 28.4 million tons, reflecting 4.6 per cent growth. Rice output rose to 10 million tons from 9.7 million tons, up 2.8 per cent. Sugarcane production climbed 6.2 per cent to 89.5 million tons, compared with 84.2 million tons a year earlier.

Cotton output, however, declined by 0.5 per cent to 7.1 million bales, while maize production fell 2.7 per cent to 8.8 million tons from 9.1 million tons last year. The ministry said other crops grew by 2.43 per cent, supported by higher output of gram, potato, mangoes, banana, turmeric and chilies. Livestock expanded by 3.75 per cent compared with 3 per cent previously, while forestry and fishing recorded normal growth rates.

Industry and services

The industry sector grew provisionally by 3.51 per cent, significantly lower than the previous year. Mining and quarrying posted only 0.4 per cent growth despite higher coal production, as output of natural gas, crude oil and other minerals declined.

Large-scale manufacturing grew by 6.11 per cent, with positive contributions from food, tobacco, petroleum products, rubber products, electrical equipment, automobiles, transport equipment, furniture and football. At the same time, lower output in electricity, gas and water supply, along with slower construction growth, weighed on the broader industrial performance.

The electricity and gas sector contracted by 10.63 per cent, which the ministry linked mainly to a high base effect, lower energy subsidies and slower output growth by WAPDA and companies. Construction grew by 5.7 per cent, compared with 8.8 per cent last year, due to increased construction-related spending by the private sector and the general government. The ministry also reported that subsidies declined by 25 per cent from Rs1.2 trillion to Rs893 billion.

In services, the economy recorded 4.1 per cent growth during the fiscal year, with support from wholesale and retail trade, transport and storage, information and communication, public administration and social security, and education.

Revisions and fiscal backdrop

The committee also revised upward the quarterly GDP growth rates for the first and second quarters and approved third-quarter growth of 4 per cent for the outgoing fiscal year.

Pakistan has followed economic stabilisation policies for the past four years. These measures have weighed on output and contributed to higher poverty, unemployment and income inequality. For fiscal year 2026-27, the government has already committed to the IMF that it will stay on the stabilisation path and deliver a primary budget surplus of Rs2.8 trillion.