Pakistan’s Gross Domestic Product (GDP) growth has shown a marked deceleration, registering a mere 0.92 percent during the first quarter of the current fiscal year. This stagnation illustrates that the economy has entered a phase of inertia following stabilization efforts under the International Monetary Fund (IMF) program.

This sub-1 percent growth pales in comparison to the 2.55 percent annual population increase recorded in the recent census, signifying its insufficiency in alleviating entrenched poverty or addressing escalating unemployment levels. Based on the revised national accounts aggregates for the fiscal year 2023-24, Pakistan’s economic footprint has reached Rs105.6 trillion, translating to $373.3 billion. Meanwhile, per capita income stands at Rs472,263 or approximately $1,669. However, historical per capita income data from 2016-17 onward will undergo revisions following updated population projections derived from the 2023 census data.

In adherence to the IMF’s $7 billion program prerequisites, the government has disclosed quarterly GDP growth figures for Q1 of FY2024-25. While industrial performance remains in decline, agriculture and services sectors exhibited modest expansion. The GDP growth rate for FY2023-24 underwent slight downward adjustment from 2.52 percent to 2.5 percent. Analysts view this growth trajectory as reflective of underlying realities, noting that while the IMF program has provided stability, it has concurrently arrested economic momentum. According to an official communique issued by the Pakistan Bureau of Statistics (PBS), the National Accounts Committee (NAC) ratified Q1 growth figures for FY2024-25 alongside revised annual estimates for FY2023-24.

The NAC report revealed that despite a contraction of 1.03 percent in the industrial sector, the overall economy achieved a growth rate of 0.92 percent during Q1 FY2024-25, propelled by a 1.15 percent uptick in agriculture and a 1.43 percent rise in services. The updated annual GDP growth rate for FY2023-24 now stands at 2.5 percent, marginally adjusted from the prior figure of 2.52 percent endorsed in the NAC’s previous meeting.

Delving into sectoral specifics, Q1 FY2024-25 saw the agricultural sector record a growth of 1.15 percent, the industrial sector retract by 1.03 percent, and the services sector advance by 1.43 percent. Crop yields, however, contracted by 5.93 percent during this period. Key contributors to this decline include a substantial 11.19 percent reduction in significant crops, attributable to decreased production of cotton (-29.6 percent), maize (-15.6 percent), rice (-1.2 percent), and sugarcane (-2.2 percent). Notably, wheat production remained unaffected, as it neither undergoes sowing nor harvesting within this quarter.

These figures underscore the urgent need for structural interventions and policy realignments to reinvigorate Pakistan’s economic machinery and address its multidimensional challenges. The detailed breakdown of Pakistan’s economic performance during the first quarter of FY2024-25 reveals a nuanced picture of growth across various sectors, alongside persistent challenges.

Agriculture posted modest growth of 1.15 percent in Q1 FY2024-25. While significant crops saw a contraction of 11.19 percent, other crops recorded a notable rebound, growing by 2.08 percent compared to a contraction of -2.08 percent in Q1 of the previous year. This improvement is attributed to

reduced reliance on inputs like fertilizers and pesticides. Livestock, a vital component of the agricultural economy, grew by 4.89 percent, up from 4.56 percent last year, driven by higher livestock product output and decreased input costs, such as dry fodder. Forestry and fishing industries registered marginal growth rates of 0.78 percent and 0.82 percent, respectively.

The industrial sector’s contraction rate eased significantly, from -4.43 percent in Q1 FY2023-24 to -1.03 percent in Q1 FY2024-25. However, key industries continued to face hurdles. The mining and quarrying sector declined sharply by 6.49 percent due to reduced production of critical commodities such as coal (-12.4 percent), natural gas (-6.7 percent), and crude oil (-19.8 percent). Large-Scale Manufacturing (LSM), as indicated by the Quantum Index of Manufacturing (QIM), dipped by 0.82 percent. Electricity, gas, and water supply industries, on the other hand, experienced slight growth of 0.58 percent. The construction industry faced a substantial decline of 14.91 percent, primarily due to a significant reduction in cement production (-16.12 percent).

The services sector exhibited growth of 1.43 percent in Q1 FY2024-25, though lower than the 2.16 percent achieved during the same period last year. This growth was bolstered by improvements in wholesale and retail trade (0.51 percent), accommodation and food services (4.58 percent), information and communication (5.09 percent), real estate activities (4.22 percent), education (2.03 percent), health and social work activities (5.60 percent), and other private services (3.30 percent). However, transportation and storage (-0.07 percent) and public administration and social security (-4.49 percent) posted declines, dampening overall sector performance.

The National Accounts Committee (NAC) has incorporated quarterly expenditure estimates into the national statistical system, covering net taxes, GDP, net primary income, and gross national income (GNI). Updated growth figures for FY2023-24 peg GDP growth at 2.50 percent, a slight downward adjustment from the earlier estimate of 2.52 percent. Agriculture growth for FY2023-24 was revised downward from 6.36 percent to 6.18 percent due to reduced forestry output, which shifted from 3.05 percent to -0.89 percent, primarily because of lower timber production. The industrial contraction rate was revised upward from -1.15 percent to -1.65 percent, reflecting declines in mining and quarrying, particularly coal (-5.21 percent) and limestone (-25.8 percent) in KP and Balochistan. 

Pakistan’s economy demonstrates a complex interplay of progress and setbacks. While certain subsectors show resilience and incremental improvement, overarching challenges such as industrial contraction, declining production in key industries, and reduced forestry output underscore the urgent need for policy interventions. Sustained growth in agriculture and services sectors provides a silver lining, yet comprehensive reforms are essential to mitigate economic vulnerabilities and chart a sustainable path forward.

Pakistan’s economic performance in the first quarter of FY2024-25 reflects a delicate balance between progress and persistent hurdles. While agriculture and services sectors showed modest growth, the industrial sector continued to struggle, albeit with a slower contraction rate. Revised annual estimates provide a clearer picture of the economy’s trajectory, highlighting mixed signals of resilience and vulnerability. With key industries facing production declines and services offering a glimmer of hope, the data underscores the need for strategic reforms to address structural inefficiencies and foster sustainable development.