'Q2 growth jumps to 3.9%'
The federal government on Thursday said the economy grew at a pace of 3.9% during the second quarter of this fiscal year, maintaining momentum in national output on the back of growth in all three major sectors.
However, the central bank raised questions about the absence of data on the actual output of crops, particularly wheat, during the meeting of the National Accounts Committee (NAC) that approved these numbers.
The economy posted a growth of 3.89% during the second quarter (October-December) of the ongoing fiscal year 2025-26, according to a statement issued by the Pakistan Bureau of Statistics (PBS) after the meeting.
Compared to the previous quarter, the growth rate in the agriculture and industrial sectors slowed, while it increased in the services sector. The agriculture sector grew at a pace of 1.8%, lower than in the previous quarter of this fiscal year. The industrial sector grew at a rate of 7.4%, down from 8.9% in the previous quarter.
However, the services sector posted a 3.7% growth rate, better than in the first quarter of this fiscal year.
There has been criticism about jobless growth in Pakistan, which, according to experts, is reflected in numbers and not in job creation or poverty reduction. According to the latest Household Integrated Economic Survey of the Planning Commission, poverty rose to 29%, the highest level in 11 years, while unemployment reached a 21-year high of 7.1%.
Income inequality also rose to a 27-year high, according to the Planning Commission.
The NAC noted that cotton production declined due to the impact of floods. Important crops contracted by 1.87% in the second quarter, while other crops contracted by 5.7% due to a decline in green fodder.
During the meeting, the central bank representative sought clarifications about the increase in output in the agriculture sector. There were repeated questions about wheat output, but the PBS did not share a production figure.
The chief statistician of the PBS stated that since harvesting has not begun in many parts of the country, actual production cannot be determined. However, a 3.4% increase in wheat cultivation indicated a likely rise in output.
For the current fiscal year, the government has set a 4.2% economic growth target, which it says remains achievable despite the impact of the Middle East conflict.
Pakistani authorities have informed the International Monetary Fund (IMF) that economic growth is still expected in the range of 4% to 4.5%, reflecting continued momentum in the auto, construction and garment industries.
However, it said that in the next fiscal year, the growth rate may remain on a similar trajectory due to higher fuel prices and weaker external demand. The government said that if the conflict is resolved quickly, the implementation of economic policies aimed at entrenching macroeconomic stability, boosting external competitiveness, and improving the private sector business environment would support a gradual pickup in medium-term growth to 5.5%, bolstered by increased investment and exports.
The NAC stated that livestock growth increased by 5.6% in the second quarter, while the forestry and fishing industries grew by 3.8% and 0.8%, respectively.
The industry posted a growth of 7.4% during the second quarter. However, the mining and quarrying industry contracted by 2.5% due to reduced production of gas, marble, limestone and other minerals. The NAC stated that large-scale manufacturing grew by 5.7% due to positive contributions from automobiles, transport equipment and petroleum products.
The electricity, gas and water supply industry posted growth of 15.11% due to increased subsidies and a decline in the deflator. Growth in the construction industry was estimated at 10.53%, driven by increased production of construction inputs.
During the second quarter, the services sector grew by 3.69%. Wholesale and retail trade grew by 4.5% due to increases in marketable supply from domestic agricultural production and manufacturing, as well as imports.
The transportation and storage industry grew by 2.8% due to increased output in road and water transport. Despite a high base, the finance and insurance industry grew by 4.5%. Public administration and social security grew by 8.7%, education by 4.9%, human health and social work by 5.7%, and other private services by 2.8%.