Pakistan Cuts FY26 GDP Growth Estimate to 3.65% as Industry and Services Slow

 ISLAMABAD: Pakistan has revised its GDP growth estimate for fiscal year 2025-26 down to 3.65 per cent, the National Accounts Committee (NAC) announced on Monday, after a mild slowdown in the industrial and services sectors pushed the economy below its May projection of 3.70 per cent, Dawn reported.

Main News Report

The revision came at the 118th meeting of the National Accounts Committee, held on Monday at the Pakistan Bureau of Statistics. The committee shaved the FY26 growth figure from the 3.70 per cent projected in May — which was itself a downward revision from the original 4 per cent target — signalling that the economy fell short of its goal for the year, according to the Dawn report.

Under the revised figures, agriculture grew 3.50 per cent (revised up from 2.89 per cent), while industry was marked down to 3.34 per cent from 3.51 per cent and services to 3.81 per cent from 4.09 per cent.

The size of the economy rose to $450.4 billion in FY26 from $410.96 billion in FY25, driven mainly by growth in the services sector, followed by industry and livestock, the committee said. Per capita income also increased in dollar terms, though Dawn noted it remains the lowest in the region.

Background Context

Pakistan's growth estimate for FY26 has now been cut twice — first from 4 per cent to 3.70 per cent in May, and now to 3.65 per cent. The 118th NAC meeting also approved the incorporation of revised import data into the national accounts estimates from FY21 to FY25, along with revised quarterly growth rates for the first three quarters of FY26 and the fourth-quarter figure.

The yearly number hides a weaker finish to the year: growth slowed to 2 per cent in the fourth quarter, the weakest pace in six quarters, as industrial activity contracted 4.7 per cent despite continued expansion in manufacturing, according to Topline Research figures reported by Nukta. The brokerage attributed the industrial slump mainly to a sharp 33.19 per cent fall in the electricity, gas and water supply segment.

• Q1 (July–September): growth revised to 3.89 per cent
• Q2 (October–December): growth revised to 4.31 per cent

• Q3 (January–March): growth revised to 4.42 per cent
• Q4 (April–June): growth eased to 2.0 per cent

Reactions and Statements

The government attributed the adjustment to "a mild slowdown in the industrial and services sectors", presenting the revision as a modest correction rather than a structural deterioration, Dawn reported.

The NAC's revised estimate places Pakistan broadly in line with the outlook of multilateral lenders, though with some variation. The International Monetary Fund has projected GDP growth at 3.6 per cent for FY26, the World Bank at 3.7 per cent and the Asian Development Bank at 3.7 per cent, while the State Bank of Pakistan expects growth to remain close to 3.7 per cent.

Topline Research noted that the full-year estimate was broadly in line with its own expectations but below the State Bank's projected range, with the fourth-quarter slowdown weighing on the final figure.

Why This News Matters

Growth of 3.65 per cent keeps Pakistan short of the pace needed to absorb a growing labour force and to consolidate the fragile stabilisation achieved under the IMF programme. A slower industrial sector — the main engine of jobs and exports — raises questions about whether the recovery is losing momentum at the very moment the government is banking on economic consolidation.

• Target missed twice: the economy fell short of the original 4 per cent and the revised 3.70 per cent targets.
• Industrial weakness: industry's contraction in the final quarter, led by the energy segment, is the main drag on the headline number.
• Lender alignment: the figure sits close to IMF, World Bank and ADB projections, reducing the risk of a credibility clash with lenders.
• Per-capita concern: income per person rose in dollar terms but remains the lowest in the region.

Future Developments

The revised estimates now feed into the government's budgetary and policy planning for the current fiscal year (FY27), where achieving a higher growth trajectory will depend on reviving industrial output and investment.

Key data points to watch include the State Bank's monetary policy stance in the coming months, the quarterly national accounts updates from the Pakistan Bureau of Statistics, and whether the next IMF review accepts the revised growth path. Any further weakness in manufacturing or energy-sector output would put pressure on the growth target for the current year.

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