GDP growth revised down to 3.65pc as country falls short of target

GDP growth revised down to 3.65pc as country falls short of target

• Industrial, services sector slowdown drags down economic growth in FY26 ISLAMABAD: The government on Monday revised the gross domestic product (GDP) growth slightly downward to 3.65 per cent for the outgoing fiscal year (FY26), attributing the adjustment to a mild slowdown in the industrial and services sectors. The country’s GDP registered modest growth alongside an increase in per capita income in dollar terms, reflecting a sluggish pace of recovery in the country’s overall output compared with the previous year, the government said. In May 2026, the government had projected the economy to grow by 3.70pc in FY26, revising its earlier estimate of 4pc. The downward adjustment now indicates that the country fell short of its GDP target. The revised growth rates in agriculture, industry and services in FY26 are 3.50pc, 3.34pc and 3.81pc, respectively, compared with earlier growth rates of 2.89pc, 3.51pc and 4.09pc. The revision came during the 118th meeting of the National Accounts Committee (NAC), which was held on Monday at the Pakistan Bureau of Statistics. The NAC 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 3.6pc for FY26, the World Bank at 3.7pc and the Asian Development Bank at 3.7pc, while the State Bank of Pakistan expects growth to remain close to 3.7pc. The committee approved the incorporation of revised imports data in the national accounts estimates from FY21 to FY25, quarterly GDP growth rates for Q1 (revised), Q2 (revised), Q3 (revised), and Q4 during FY26 and updated annual growth rates for FY25 and FY26. The size of the economy rose to $450.4 billion in FY26 from $410.96bn in FY25, mainly driven by growth in the services sector, followed by industry and livestock. Per capita income slightly increased to $1,896 in FY26, the lowest in the region, up from $1,824 in FY25. The projection is based on the 2023 census. However, it was $1,551 in FY23, $1,766 in FY22 and $1,677 in FY21. This suggests a deterioration in the standard of living and well-being acro­ss almost all segments of society, with no tangible increase in personal incomes due to unprecedented inflationary pressures, which reduce disposable income and limit individuals’ ability to afford goods and services, save, or invest. Updated growth rates Meanwhile, the NAC also approved the updated growth rates for Q1, Q2 and Q3 of 2025-26 at 3.89pc, 4.31pc and 4.42pc, respectively, compared with 3.92pc, 4.05pc and 3.99pc, presented at the 117th meeting of the NAC. The fourth quarter of FY26 recorded a 2pc growth in GDP. The committee approved the updated annual growth of 3.11pc for FY25, which was estimated at 3.18pc in the previous meeting. In agriculture, important crops improved from 0.65pc to 1.59pc due to wheat and maize, other crops have witnessed significant improvement from 2.43pc to 4.28pc due to higher production of pulses (6.3pc), fruits (1.3pc), tomato (44pc), oilseed (5.4pc), and green fodder (2.4pc). Livestock decreased slightly from 3.75pc to 3.71pc because of increased fodder inputs. Updated growth rates in forestry and fishing are 10.80pc and 1.39pc, respectively. The committee revised growth in industry during FY26 to 3.34pc from 3.51pc estimated previously. The mining & quarrying industry has improved from 0.38pc to 1.52pc due to improvement in gas (2.84pc), crude oil (5.12pc), and coal (2.73pc). Large-scale manufacturing (LSM), which is measured through the Quantum Index of Manufacturing (QIM), has declined from 6.11pc to 5.01pc. The major LSM groups with positive contributions are food (7.03pc), tobacco (12.61pc), petroleum products (9.7pc), rubber products (14.19­pc), electrical equi­pment (14.25pc), automobiles (57.77­pc), transport equipment (42.36pc), furniture (22.69pc), and other manufacturing (foot­ball) (16.62pc). The construction industry has improved from 5.73pc to 6.30pc because of increased construction-related expenditure in the public sector. However, some LSM groups posted negative growth, e.g., pharmaceuticals (-8.87pc), iron & steel products (-7.84pc), chemicals (-2.53pc), and leather products (-1.95pc), electricity (-10.24pc) in FY26. The services industry has declined from 4.09pc to 3.81pc in FY26, with positive contributions from all the constituents. The growth in wholesale and retail trade posted at 2.37pc as against the previous growth of 3.71pc due to decrease in manufacturing and imports. Transport and storage industry growth improved to 3.23pc from 2.31pc due to upward revisions reported in railways, water transport, and air transport. Similarly, information & communication growth increased from 7.52pc to 9.53pc, the finance & insurance also improved from 0.32pc to 4.23pc in FY26 due to improvement in the insurance industry. The slowdown was also reported in public administration and social security to 5.67pc from 8.54pc, education 4.17pc from 5.23pc, and human health and social work 5.52pc from 6.85pc. Published in Dawn, October 20th, 2026