Economy posts 2.4% Q3 growth, falls short of FY25 target

Pakistan’s economy grew 2.4% in the third quarter of the ongoing fiscal year, pushing provisional full-year growth to 2.68%, which is well below the government’s 3.6% target, official data showed on Tuesday. 

The National Accounts Committee (NAC), which approved the estimate, said the revised figures place the size of the country’s economy at $410.96 billion.

Brokerage Topline Securities, in a note, said the average quarterly growth for 9MFY25 was estimated at around 1.8%, while the government had published a provisional growth of 2.68% for FY25, lower than the targeted growth of 3.6%.

This month State Bank of Pakistan (SBP) cut its key policy rate by 100 basis points to 11%, citing an improved inflation outlook and resuming a series of cuts from a record high of 22%, following a brief pause in March, to support growth.

The latest national accounts aggregates for FY25 showed the size of the economy at Rs114.7 trillion ($410.96 billion) up from Rs105.1 trillion ($ 371.66 billion), the committee said.

Growth in the agriculture sector was 1.18% in Q3, despite a decline in important crops, while industry contracted 1.14%, hit by negative growth in mining and quarrying and large-scale manufacturing.

The committee also approved Pakistan's revised GDP growth at 1.37% in the first quarter and 1.53% in the second.

Manufacturing sector growth slowed to a seven-month low in April, with the HBL Pakistan Manufacturing Purchasing Managers' Index (PMI) easing to 51.9 from 52.7 in March, weighed by concerns over global trade.

Topline said the NAC numbers were in line with their expectation. "We expect Pakistan full year GDP to grow at 2.5-3.0% in FY25 wherein we expect agriculture sector to grow at 1.8% followed by Industrial 1.0% and Services at 3.4%."

It must be noted that the International Monetary Fund (IMF) in a recent report has revised down Pakistan's GDP growth from 3.2% to 2.6%, the brokerage reported.