Pakistan has revised its FY26 GDP growth forecast down to 3.65% from 3.70% due to slowing industrial and services output. The updated figure aligns with projections from international agencies like the IMF, highlighting ongoing economic strain from high inflation and reduced consumer purchasing power.
The National Accounts Committee in Pakistan has officially lowered the country's economic growth target for the fiscal year 2026. The new growth forecast stands at 3.65%, down from the previous expectation of 3.70%. This adjustment follows a comprehensive review of the national economy, which is now estimated to have a total output of $450.4 billion for the year.
The revision stems from a performance slowdown across key sectors that drive the economy. Large-scale manufacturing, which is vital for national economic health, saw its growth contribution fall to 5.01% from a previous estimate of 6.11%. Similarly, the services sector, including wholesale and retail trade, faced significant contraction. Growth in retail trade dropped to 2.37%, down from 3.71%, largely due to lower manufacturing output and reduced import activity.
While industrial and services sectors struggled, the mining and quarrying sector provided a small positive trend. This area recorded a growth improvement to 1.52%, supported by stronger results in coal, gas, and crude oil extraction. Despite this, the overall economic momentum remains constrained by broader issues affecting household finances.
Inflation remains a primary concern for the average household. Although official data shows per capita income rising to $1,896, persistent inflationary pressure continues to limit consumer spending power and reduces the capacity for personal savings. The government’s revised growth projection now aligns with current estimates from global financial institutions, including the International Monetary Fund and the World Bank, both of which have been projecting growth in the 3.6% to 3.7% range.
For observers of the region's economy, the key monitorables moving forward will be whether manufacturing activity can recover and if inflationary trends ease to support higher consumption. The government's ability to maintain growth will depend on its success in stabilizing these key economic sectors and managing import activity, which has been a recent bottleneck.