§ However, growth for FY25 is lower than the long-term average of 4.7% and last five-year growth of 3.4%. This FY25 growth of 2.68% is broadly in line with revised projections of the IMF and World Bank, reported at 2.6% and 2.8%, respectively, published in April 2025. However, it is less than the government’s initial target of 3.6% growth in FY25.
We believe this number will be revised down, especially due to the enlarged growth numbers of the industrial segment at 4.77% compared to the actual growth in 9MFY25 at -1%.
§ Services sector growth at 2.91%: Services sector growth has posted a provisional growth of 2.91% in FY25 compared to a 2.19% change in FY24. Within services, Public Administration and Social Security (General Government) saw the highest growth of 9.92%, while wholesale and retail trade saw a meagre 0.14% rise. We believe that by the end of the year, service numbers for FY25 will be revised upward, as the 9MFY25 growth average is already 2.97%.
§ Industrial segment recorded provisional growth of 4.77%, highest in 4 years: Contrary to a contraction of 1% in 9MFY25, the Industrial sector has posted provisional growth of 4.77% in FY25, the highest in 4 years. Within this, the electricity, gas, sand, and water supply, construction, and manufacturing sectors are likely to grow by 28.88%, 6.61%, and 1.34%, respectively. At the same time, mining and quarrying, as well as Large-Scale Manufacturing (LSM), are expected to post declines of 3.38% and 1.53%, respectively. We believe industrial growth will be revised down after taking a cue from 9M numbers.
§ Agriculture growth at 9-year low: The Agri sector is expected to post the lowest growth of 0.56% in 9 years (FY16: +0.41%) vs 5 years avg—growth of 3.38%. Lower growth is attributed to a decline in important crop production and cotton ginning by 13.5% and 19.0%, respectively. At the same time, other crops posted growth of 4.78%. Livestock, Forestry, and fishing are expected to post growth rates of 4.72%, 3.03%, and 1.2%, respectively. On the other hand, important crops, such as cotton, will post declines of 13.49% and 19.03%, respectively.
§ We maintain our Pakistan GDP growth estimate at 2.5% for FY25 and 4% for FY26.
Other takeaways from the press briefing of the Finance Minister and the economic survey document
§ The Finance Minister mentioned that the government has undertaken various structural reforms which were warranted to sustainable economic growth and will continue to do so in the upcoming fiscal year(s).
§ Recoveries in DISCOs have improved due to changes in their Governance Structure. The government.Hass constituted a professional board structure in these DISCOs.
A rise of Rs1.25 Trillion through banks will play an important role in clearing this legacy circular debt.
§ Govt. has saved Rs0.8tn to Rs1tn in interest expense in FY25 due to a decline in interest rates.
§ The government has already implemented a defined contribution pension plan, starting July 1, 2024, for all recruits to address pension issues.
§ Rightsizing of the federal Government is also under process and being implemented in spirit
§ Economic Indicators: Pakistan reported a GDP surplus of 2.68% in FY25, slightly lower than the target growth due to underperformance in the agricultural sector. The current account remained in surplus in 10MFY25, and the full year is expected to close surplus as well. Full-year remittances are expected to be around US$37-38 billion. Freelancers have earned over US$ 400 million out of the total IT Exports of US$3.1 billion.
§ During FY25, Important crops declined by 13.49% amidst lower cultivation area and adverse weather conditions, significantly affecting cotton (-30.7%), wheat (-8.9%), sugarcane (-3.9%), maize (-15.4%), and rice (-1.4%).
§ Globally, economic growth is expected at 2.8% in 2025, lower from 3.3% achieved in 2024.
The average time to maturity of domestic debt has increased from 2.9 to 3.5 years. Nnotedb, ly this is also one of the key targets set by the IMF.
§ The year 2024 was recorded as the Ninth warmest year in the last 64 years, with an average temperature of 23.52°C and rainfall levels 31% above the historical average.
