Pakistan’s Economy Grows 1.73% in Q2 Despite Industrial Slowdown

Pakistan posted a gross domestic product (GDP) growth of 1.73 percent in the second quarter (October-December) of the fiscal year 2024-25, according to figures released by the Pakistan Bureau of Statistics (PBS). The growth was driven by gains in the agriculture and services sectors, despite a contraction in industry. The National Accounts Committee (NAC), which held its 112th meeting at the Statistics House in Islamabad, approved the provisional GDP growth rate for the second quarter and revised the first-quarter figure upward to 1.34 percent from the previously reported 0.92 percent. The adjustment reflects improved performance in services, which grew 2.21 percent instead of the earlier estimate of 1.43 percent, and a reduced industrial contraction of 0.66 percent compared to the initial assessment of 1.03 percent. The agriculture sector expanded by 1.10 percent in the second quarter, but crop production declined by 5.38 percent due to a 7.65 percent drop in important crops. Cotton production fell significantly by 30.7 percent, dropping from 10.22 million bales to 7.084 million bales. Maize output declined by 15.4 percent to 8.24 million tons, while rice and sugarcane recorded smaller decreases of 1.4 percent and 2.3 percent, respectively. The wheat crop, which was not factored into first-quarter growth, saw a 6.8 percent reduction in cultivation area compared to last year. Other crops showed a modest growth of 0.73 percent, aided by a 14.2 percent increase in potato cultivation. Livestock grew by 6.51 percent, up from 2.96 percent in the same period last year, mainly due to lower costs for green and dry fodder. Forestry declined by 0.64 percent, while the fishing industry posted a modest growth of 0.79 percent. The industrial sector contracted by 0.18 percent in the second quarter, but the rate of decline improved from 1.81 percent in the same quarter last year. Mining and quarrying fell by 3.29 percent due to reduced production of coal (-6.34 percent), natural gas (-6.16 percent), and crude oil (-11.4 percent). Large-scale manufacturing declined by 2.86 percent, with notable drops in sugar (-12.63 percent), cement (-1.82 percent), and iron and steel (-17.86 percent). However, the electricity, gas, and water supply industry grew by 7.71 percent, driven by an increase in gas production and a decline in deflator values. The construction sector contracted by 7.14 percent due to lower cement and steel output. The services sector remained the strongest performer, expanding by 2.57 percent compared to 1.32 percent in the same quarter last year. Despite a contraction in wholesale and retail trade (-1.13 percent), services growth was bolstered by gains in transportation and storage (1.15 percent), information and communication (8.45 percent), finance and insurance (10.21 percent), public administration and social security (9.10 percent), public education (4.80 percent), and health services (6.60 percent). Other positive contributions came from accommodation and food services (4.45 percent), real estate activities (4.12 percent), and private sector services (3.14 percent). The NAC acknowledged the efforts of the National Accounts team at PBS, along with the Ministry of Planning, Development and Special Initiatives, the Ministry of Finance, and the State Bank of Pakistan, in compiling the quarterly GDP estimates.