ISLAMABAD, June 10, 2025 – The federal government has set an ambitious GDP growth target of 4.2% for the fiscal year 2025-26, as per official budget documents released Tuesday.
This projection reflects a cautiously optimistic outlook for Pakistan’s economy, following a year of macroeconomic consolidation and moderate recovery.
The budget highlights a sector-wise growth strategy that aims to stimulate broad-based expansion. The agricultural sector is forecasted to grow by 4.5%, fueled by improved input availability, climate adaptation strategies, and targeted initiatives under the URAAN Pakistan framework. This sector will be crucial in supporting rural livelihoods and food security.
The industrial sector is expected to maintain its recovery trajectory, with a growth target of 4.3%. Key contributors include a projected 3.5% increase in Large-Scale Manufacturing (LSM), 3.0% growth in mining and quarrying, and a stable construction industry. The services sector is also anticipated to grow by 4.0%, building on the momentum from commodity-producing sectors and rising domestic demand.
The government has also emphasized the role of investment and savings in supporting GDP growth. Total investment is targeted at 14.7% of GDP, up from 13.8% in the previous fiscal year. National savings are expected to rise to 14.3% of GDP, reflecting improved domestic resource mobilization, fiscal discipline, and ongoing structural reforms.
In retrospect, FY2024-25 saw Pakistan’s GDP expanding by 2.7%, a modest but encouraging improvement from the 2.5% recorded in FY2023-24. The agricultural sector’s growth slowed significantly to 0.6% from 6.4%, largely due to climatic challenges. However, the industrial sector rebounded strongly with a 4.8% growth rate, recovering from a previous contraction. The services sector also showed signs of resilience, expanding by 2.9%.
The government’s FY2025-26 economic strategy places a clear focus on achieving sustainable and inclusive GDP growth. While global uncertainties persist, Pakistan’s medium-term outlook remains cautiously optimistic, supported by reforms aimed at improving competitiveness, attracting investment, and boosting productivity across all major sectors of the economy.