The National Accounts Committee (NAC) is reported to have approved GDP growth of 3.71 percent in the first quarter of FY26 (1QFY26) and revised upward the growth rate for the last quarter of FY25 to 6.17 percent. However, these official figures are being strongly disputed by independent economists and policy analysts, who argue that the numbers do not accurately reflect the prevailing economic realities.
According to available details, the reported 3.7 percent growth consists of 2.9 percent growth in agriculture, a robust 9.4 percent expansion in industry, while the services sector is said to have grown by 2.4 percent. A closer look at the agricultural sector, however, raises serious questions. Crop output reportedly declined by 3.7 percent, with important crops and cotton ginning all registering negative growth. Despite these negative indicators, it is claimed that agriculture as a whole posted growth of 2.9 percent, mainly due to an exceptional performance by the livestock sector. This claim appears questionable, as ground realities suggest otherwise. Beef and mutton prices have been rising sharply, prompting the question of how livestock production could have grown so strongly amid increasing prices and supply pressures.
The claim of 9.4 percent industrial growth is also contradicted by key indicators. Large-Scale Manufacturing (LSM) growth stands at only 4.1 percent, far below the headline figure. The highest reported growth within the industrial sector is in electricity, gas and water supply, which allegedly expanded by 25.5 percent, following growth of over 100 percent in the previous quarter. However, electricity consumption during 1QFY26 increased by only 1 percent. The higher growth in this subsector appears to be largely driven by increased subsidies aimed at clearing circular debt rather than by genuine increases in physical output. The second-largest reported increase is in construction, which grew by 21.0 percent, partially supported by a 15 percent rise in cement production. In contrast, the services sector grew by only 2.35 percent, while wholesale and retail trade expanded by a modest 3.1 percent, reflecting subdued economic activity.
According to the well-known think tank Economic Policy and Business Development (EPBD), the economic growth figures released by the government for the first quarter of FY26 are exaggerated and fail to reflect the actual market situation. EPBD argues that the reported 3.71 percent Gross Value Added (GVA) growth for Q1FY26—with agriculture growing by 2.89 percent, industry by 9.38 percent and services by 2.35 percent—is “difficult to reconcile with ground realities.”
In the view of the think tank, the most glaring discrepancy lies between domestic output estimates and actual trade performance. Despite the reported growth in agriculture and food-related manufacturing, food group exports declined sharply by 25.8 percent during the quarter, while food imports increased by 18.8 percent. As EPBD notes, “If domestic production were genuinely expanding, exports should strengthen rather than collapse.” This suggests that rising imports may be artificially propping up growth figures rather than reflecting real domestic expansion.
EPBD has also questioned the reported 2.89 percent growth in agriculture, pointing out that severe flooding during the middle months of 2025 likely resulted in stagnant or even negative agricultural growth. Contrary to official data showing expansion, important crops declined by 0.75 percent, driven by a 1.2 percent fall in cotton production and the absence of a wheat crop during Q1. These trends clearly point towards overestimation in several agricultural sub-sectors.
With regard to industrial sector growth of 9.38 percent, EPBD highlights that this expansion was largely driven by a more than 25 percent increase in electricity, gas and water supply, which was not the result of higher output but rather of heavy subsidies. These subsidies reportedly jumped from Rs 20 billion to Rs 118 billion during the period under review.
Similarly, the reported 21 percent growth in the construction sector does not fully align with supporting indicators. While cement production rose by 15.32 percent, imports of transport equipment more than doubled, indicating that construction activity is increasingly dependent on imports rather than on domestic supply chains. Meanwhile, declining cotton output resulted in a 12 percent drop in cotton ginning, while cotton exports fell by around 10 percent. EPBD has also drawn attention to a reversal in the sugar sector, as Pakistan has shifted from being an exporter to an importer. The services sector growth of 2.35 percent further underscores a slowdown on a quarter-on-quarter basis, reflecting weak demand conditions.
According to EPBD, GDP figures now reveal a widening gap between domestic production and trade performance, raising serious concerns about the quality, credibility and sustainability of the reported economic recovery. The think tank concludes that the government’s claim of economic recovery is not grounded in solid fundamentals, as the pace of recovery remains slow due to deep-rooted structural weaknesses in the economy. Rather than manipulating or overstating figures, the government should adopt well-thought-out measures to address these fundamental flaws. The lack of economic dynamism is evident from rising unemployment and poverty levels. Over-taxation and excessive regulation are forcing both domestic and international companies to shift their operations abroad, a danger signal that should not be ignored. EPBD has rightly urged the government to pursue market-oriented and business-friendly policies and to create a stable and supportive environment for private sector activity. Ultimately, only the private sector–led investment and enterprise can deliver long-term, sustainable economic growth driven by industrial dynamism and expanding exports.