Pakistan Cuts FY2026 Growth to 3.65% as Industry Slumps in Final Quarter

A stronger year ends with a sharp slowdown

Pakistan's economy grew 3.65% in the fiscal year ended June 30, 2026, as a stronger agricultural performance helped offset weaker estimates for industry and services. The annual figure was slightly below the previous estimate of 3.70%, while growth slowed to 2% in the final quarter as industrial activity contracted 4.70%.

The Pakistan Bureau of Statistics published the figures after the National Accounts Committee's 118th meeting on October 19, 2026. Its October meeting statement put the economy's value at $450.4 billion and annual income per person at $1,896.

The annual revision was small, a reduction of 0.05 percentage points. The change within the year was much larger: growth reached 4.42% in the third quarter before falling to 2% in the fourth. Agriculture and services continued expanding during that final period, while a steep decline in electricity, gas and water supply pulled industry into contraction.

Pakistan still grew faster than in FY2025, whose growth estimate was reduced to 3.11% from 3.18%. The updated figures therefore show an economy that gained ground across the year but entered FY2027 with less momentum than its middle quarters had suggested.

What the economy's $450.4 billion value means

The National Accounts Committee valued annual economic output at Rs126.4 trillion, compared with Rs114.9 trillion in the previous fiscal year. In dollars, the corresponding values were $450.4 billion and $408.7 billion, an increase of $41.7 billion, or about 10.2%.

Those economy size figures measure output at current prices. The 3.65% GDP growth rate measures the increase after adjusting for price changes. GDP, or gross domestic product, adds up the value created by producing goods and delivering services. Prices and exchange rates also affect how large the economy looks when expressed in rupees or dollars.

The revised dollar valuation was $1.7 billion below the provisional estimate of $452.1 billion. Annual income per person was also lowered by $5, from $1,901 to $1,896, equivalent to Rs531,897.

Per capita income expresses a national income total as an average across the population. Actual earnings vary widely between households, occupations and regions. For families, the practical value of income also depends on the prices they pay for food, transport, electricity and other essentials.

How growth changed through the year

The committee revised all three previously published quarterly growth estimates. It slightly lowered the first quarter but raised the second and third, with the largest upward adjustment going to the third quarter.

The fiscal year and the subsequent revisions followed this sequence:

• July to September 2025: First quarter growth was revised to 3.89% from 3.92%.
• October to December 2025: Second quarter growth was raised to 4.31% from 4.05%.
• January to March 2026: Third quarter growth was raised to 4.42% from 3.99%.
• April to June 2026: Fourth quarter growth came in at 2%, compared with 6.07% in the same period a year earlier.
• October 19, 2026: The committee approved the fourth quarter estimate and updated annual accounts.

Topline Research described the final quarter as the weakest in six quarters. Its 2% growth rate was less than half the 4.21% average recorded across the preceding three quarters.

The sector figures show where momentum weakened. Industrial growth moved from 7.76% in the first quarter to 6.62% in the second and 4.87% in the third, before turning negative. Agriculture grew 3.18%, 3.34% and 3.79% in the first three quarters, while services grew 3.04%, 4% and 4.54%.

Why utilities weighed so heavily on industry

Electricity, gas and water supply contracted 33.19% in the fourth quarter, helping pull total industrial activity down 4.70%. A year earlier, industry had grown 20% in the corresponding quarter, with utilities recording an unusually large increase of 123.03%.

The Pakistan Bureau of Statistics attributed the utilities decline to lower subsidies, a high deflator and the base effect. A deflator is a measure used to remove price changes from output values. The base effect describes how an unusually high or low figure in the comparison period can make the next year's growth rate look especially weak or strong.

Topline Research also connected the unusually high comparison figure to adjustments involving solar power data in the previous year's calculations. Together, the explanations show why the utilities result reflected both changes in activity and the way output was valued against an exceptional earlier period.

Other industrial activities continued to expand in the final quarter. Mining and quarrying grew 8.90%, total manufacturing increased about 3%, and manufacturing by smaller producers rose 9.5%. Large scale manufacturing grew only 0.41%, leaving major factories with much weaker momentum than the broader manufacturing total.

Agriculture grew 3.71% and services 3.62% in the same quarter. Their expansion kept total GDP growing despite the industrial decline. For the full fiscal year, electricity, gas and water supply contracted 10.24%, making utilities a continuing source of weakness rather than a problem confined to the final three months.

Wheat, maize and other crops lift agriculture

Agriculture received the largest upward revision among the three main sectors. Its annual growth estimate rose to 3.50% from 2.89%, supported by better results for wheat, maize and several other crops.

Growth in the category called important crops increased to 1.59% from 0.65%. Other crops grew 4.28%, compared with the previous estimate of 2.43%. Production increases included tomatoes at 44%, pulses at 6.3%, oilseeds at 5.4%, green fodder at 2.4% and fruits at 1.3%.

Those figures describe different products with different weights in the agricultural economy. Tomatoes had the largest percentage increase among those listed, while the combined agricultural result also reflected major crops, livestock, forestry and fishing.

Livestock growth eased slightly to 3.71% from 3.75%, which the committee linked to increased fodder inputs. Agricultural value added measures the value created after accounting for inputs such as animal feed, so changes in those costs can affect the result. Forestry expanded 10.80%, while fishing grew 1.39%.

The comparison with FY2025 is substantial. Agricultural growth for that earlier year was revised down to 1.32% from 1.53%, mainly because of a forestry revision. FY2026 growth of 3.50% was therefore 2.18 percentage points higher. In the final quarter alone, agriculture expanded 3.71%, compared with 0.58% a year earlier.

Factories grow unevenly as construction improves

Industry's annual growth estimate fell to 3.34% from 3.51%. Large scale manufacturing was a major source of the downward adjustment, with growth reduced to 5.01% from 6.11%, based on the Quantum Index of Manufacturing. That index tracks changes in production across major manufacturing industries.

Factory performance varied sharply. Automobile production grew 57.77%, transport equipment 42.36%, furniture 22.69%, electrical equipment 14.25% and rubber products 14.19%. Food manufacturing rose 7.03%, while petroleum products increased 9.7%.

Other industries contracted. Pharmaceutical products fell 8.87%, iron and steel products 7.84%, chemicals 2.53% and leather products 1.95%. The contrast helps explain why rapid growth in vehicles and several other products coexisted with a more modest manufacturing result.

Mining and quarrying improved to 1.52% growth from the previous estimate of 0.38%. Gas output rose 2.84%, crude oil 5.12% and coal 2.73%. Construction growth was raised to 6.30% from 5.73%, which the committee attributed to increased public sector construction spending.

Industry nevertheless expanded more slowly than in FY2025, when its revised growth rate was 5.46%. Agriculture accelerated between the two years, but industry lost 2.12 percentage points of growth, showing that the annual recovery was uneven across the economy.

Digital services strengthen while trade slows

Services grew 3.81% in FY2026, down from the previous estimate of 4.09%. All constituent service sectors expanded, although several stronger results were outweighed by a weaker estimate for wholesale and retail trade.

Wholesale and retail growth was reduced to 2.37% from 3.71%, which the committee linked to downward adjustments in manufacturing and imports. Trade connects producers and imported goods with shops and customers, so changes in the volume of goods moving through the economy affect its measured activity.

Information and communication growth was raised to 9.53% from 7.52%. Finance and insurance improved to 4.23% from 0.32%, reflecting stronger insurance activity. Transport and storage rose to 3.23% from 2.31%, supported by revisions in railways, water transport and air transport.

Public administration and social security expanded 5.67%, education 4.17%, and health and social work 5.52%. In the final quarter, information and communication grew 15.03%, while wholesale and retail trade increased only 0.75%. Those results illustrate the different conditions facing digital activities and businesses handling physical goods.

Why the committee revised earlier years too

The October meeting, chaired by the secretary of the Ministry of Planning, Development and Special Initiatives, also approved revised import data for national accounts covering FY2021 through FY2025. Updated annual benchmarks and sector indicators fed into the latest calculations.

National accounts estimates change as more complete production, trade and financial information becomes available. Annual benchmarks provide broader totals that statisticians use to update quarterly calculations, helping explain why several earlier quarters changed at the same meeting.

The Pakistan Bureau of Statistics publishes the quarterly release, quarterly tables and updated annual tables through its national accounts page. The latest revision lowered FY2025 growth to 3.11%, with agriculture at 1.32%, industry at 5.46% and services at 3.13%.

Using the revised figures for both years, Pakistan's growth accelerated by 0.54 percentage points in FY2026. Stronger agriculture and services supported that improvement, while slower industrial growth limited its scale.

FY2027 forecasts point to growth, with energy risks

The Asian Development Bank had forecast FY2026 growth of 3.5% in its April economic outlook, published on April 10, 2026. The revised 3.65% result was slightly above that projection, but below the State Bank of Pakistan's projected range of 3.75% to 4.75%.

For FY2027, the ADB's April outlook projected 4.5% growth. Topline Research's October assessment forecast a lower range of 3.5% to 4%, including agriculture at 4% to 4.5% and industry and services each at 3.5% to 4%. These are forecasts made at different points in the year; FY2027's actual growth is not yet known.

Emma Fan, the ADB's country director for Pakistan, described the recovery and its risks when the April outlook was released:

Pakistan's economy has stabilized and begun to show stronger momentum, supported by progress in implementing key economic reforms amid a challenging global environment,

The ADB expected investment, monetary easing, construction incentives in the FY2026 budget and reconstruction after flooding to support activity. It also warned that a prolonged Middle East conflict could raise energy and fertilizer costs, weaken agricultural and industrial output, reduce money sent home by workers abroad and widen the current account deficit.

The current account tracks trade in goods and services alongside income and transfers with other countries. Higher imported fuel costs can increase the financing Pakistan needs from abroad while also raising costs for factories, farms and households.

The ADB's April projections put average inflation at 6.4% in FY2026 and 6.5% in FY2027, within the central bank's medium term target range of 5% to 7%. The final quarter's industrial weakness makes the balance between supporting activity and containing prices especially relevant to the next phase of growth.

Key Points

• Pakistan's FY2026 GDP growth was revised to 3.65% from 3.70%, compared with revised FY2025 growth of 3.11%.
• The economy was valued at Rs126.4 trillion, or $450.4 billion, with annual income per person of $1,896.
• Fourth quarter growth slowed to 2% as industry contracted 4.70% and electricity, gas and water supply fell 33.19%.
• Annual agriculture growth improved to 3.50%, while industry and services grew 3.34% and 3.81%.
• Topline Research forecasts FY2027 growth of 3.5% to 4%; the ADB's April forecast was 4.5%.