Pakistan’s economy posted a subdued GDP growth of 0.92% in the first quarter of FY25, a significant slowdown from the revised 2.5% growth recorded in FY24, according to data released by the National Accounts Committee (NAC).
The modest growth was primarily driven by a 1.43% increase in the services sector and a 1.15% rise in agriculture. However, the industrial sector contracted by 1.03%, weighing down overall economic performance.
Agriculture: Despite a sharp 11.19% contraction in major crops such as cotton (-29.6%), maize (-15.6%), rice (-1.2%), and sugarcane (-2.2%), the sector posted 1.15% growth. This was supported by a 4.89% rise in livestock and 2.08% growth in other crops.
Industry: Industrial output fell due to a 6.49% decline in the mining and quarrying sector and a 0.82% drop in large-scale manufacturing. Crude oil production was down 19.8%, gas fell by 6.7%, and coal production declined by 12.4%. Additionally, the construction industry contracted by 14.91%, largely due to a 16% drop in cement production.
Services: The services sector showed resilience, growing by 1.43%, driven by a 5.6% increase in human health and social work activities and a 5.09% rise in information and communication. Other contributors included wholesale and retail trade (+4.58%) and accommodation and food services (+0.51%).
Economic Outlook
The NAC revised FY24 GDP growth down to 2.5% from the earlier estimate of 2.52%. This adjustment was due to a reduction in agriculture growth to 6.18% (previously 6.36%) and a sharper contraction in industry at 1.65% (previously 1.15%).
According to renowned brokerage, Topline Securities, the expected GDP growth for FY25 to range between 2.5% and 3.0%, supported by projected growth in agriculture (1.7%), industry (2.1%), and services (3.4%).
The Asian Development Bank (ADB) recently raised its FY25 growth forecast for Pakistan to 3% from 2.8%. Similarly, the State Bank of Pakistan expects growth to remain in the upper half of the 2.5-3.5% range.
Pakistan’s economic recovery faces challenges, including structural weaknesses and external vulnerabilities. While agriculture and services provide some optimism, the industrial sector’s continued contraction remains a concern.
