Pakistan’s Gross Domestic Product (GDP) expanded by 0.92% in the first quarter of fiscal year 2024-25 against the corresponding period last year, largely due to the services and agriculture sectors.
According to the Pakistan Bureau of Statistics (PBS), the services sector grew by 1.43% and the agriculture sector 1.15%, contributing significantly to the overall economic expansion. However, it noted, the large-scale industrial sector declined by 1.03%, partially offsetting the gains made by services and agriculture.
The recorded agricultural growth stems from a 4.89% increase in livestock and 2.08% growth in other crops, offsetting the 11.19% contraction in major crops such as cotton, maize, rice, and sugarcane.
A 6.49% fall in mining and quarrying, and a 0.82% decline in large-scale manufacturing is credited for the industrial decline. The first three months of the ongoing fiscal also saw a significant decline in crude oil, gas, and coal production. The construction industry similarly shrank by 14.91%, while the electricity, gas, and water supply industry grew by 0.58%.
The growth in the services sector was led by human health and social work activities (5.6%); and information and communication (5.09%). Accommodation and food services and wholesale and retail trade also posted growth.
Sustainable growth
In a recent report, the Ministry of Finance noted that improved fiscal performance, driven by higher revenues and prudent expenditure management, was expected to create fiscal space for development spending and support sustainable economic growth. It also cited an easing of the monetary policy—down to 13% from 22% in June—as stimulating economic activity.
The reduction in the policy rate was supported by declining inflation, which fell to 4.9% in November 2024, the lowest since April 2018.
In a recent report, an analyst at Ismail Iqbal Securities noted that Pakistan’s IMF-driven reforms are tackling crucial issues such as circular debt and governance inefficiencies, building a strong foundation for future growth. “The political stability, along with easing inflation and falling interest rates, restores investor confidence and provides the certainty needed for consistent economic progress,” they said.
Analysts expect Pakistan’s GDP to grow 2.5-3% during FY25; earlier the Asian Development Bank revised its forecast for Pakistan’s GDP growth from 2.8% to 3%.