The previous week’s article had highlighted the divergence between the sectoral growth rates for 2025-26, estimated by the PBS (Pakistan Bureau of Statistics), and in the Annual Plan of the Planning Commission as follows:
These large divergences in the sectoral growth rates have necessitated an examination of the growth rates. Also, given the sectoral shares, the GDP growth, according to the Annual Plan, is 3.2 percent, not 3.7 percent.
The analysis of growth has been undertaken at the sub-sectoral level. The focus is on the relatively large sectors which make a sizeable contribution to the GDP. This includes major crops and livestock in the agricultural sector, manufacturing in the industrial sector, and wholesale and retail trade, transportation, and public administration and social security in the services sector. The growth rate of smaller sectors has been taken as the same as reported by the PBS.
The trend within the agricultural sector since 2020-21 has been of a considerable variation in the annual growth rate of the major crop sector, but a steadier growth rate in the livestock sector, at its highest apparently in 2025-26. In the industrial sector, there is also fluctuation in the growth rate of the large-scale manufacturing sector. This is also the case with the large sub-sectors in services.
Agriculture
The Pakistan Economic Survey has given estimates of the major crops in 2025-26. The growth rate varies from 6.2 percent in sugar cane to a negative 0.5 percent in cotton. The respective weights of each crop are also given in the Pakistan Economic Survey. Overall, the estimated growth rate of the major crop sub-sector is 3.0 percent. This is perhaps surprising because this is substantially higher than the PBS estimate of only 0.7 percent.
Next, growth in the livestock sector is examined. Over 54 percent of the value-added is from the output of livestock products. This is approximated by the level of consumption of these products in the Household Integrated Economic Surveys of the PBS. Between 2018-19 and 2024-25, the cumulative growth in consumption is only 6.2 percent, implying thereby the annual growth in consumption of only 1 percent, due particularly to the low growth in real per capita income. The other almost half of the value-added arises from the annual increase in the net number of livestock.
Therefore, it is likely that the growth rate of the agricultural sector is between 3 percent in major crops and 2 percent in the livestock sub-sector. As such, the estimate of 2.4 percent growth rate of the agricultural sector in 2025-26 is more likely, as compared to the PBS estimate of 2.9 percent.
Industrial sector
Turning to the industrial sector, we focus first on the large-scale manufacturing sector. The Quantum Index of Manufacturing (QIM) of the PBS indicates the growth rate from July 25 to April 26 at 6.1 percent. This is effectively the growth rate taken in the GDP estimates.
Examination of the performance of the individual industries reveals that three major industries, namely, sugar, automobiles and POL products, have achieved high growth rates in 2025-26 of 31.6 percent, 64.3 percent and 10.0 percent, respectively. They account for over 62 percent of the overall growth of the large-scale manufacturing sector in 2025-26.
There are some problems with these estimates. First, the growth in sugarcane output in 2025-26 is 6.2 percent. Therefore, the 31.6 percent increase in sugar output is unlikely. The growth rate of the POL industry may have declined in recent months due to the Middle East war,
The apparent buoyancy in the small-scale manufacturing sector with a growth rate of 8.5 percent is also unlikely. The PGS Labour Force Survey of the PBS reveals the annual growth rate of employment of 3.3 percent in the last few years. Also, exports by small-scale manufacturing have not performed well in 2025-26.
Overall, the PBS estimate of a growth rate of 3.5 percent in 2025-26 is unlikely. It is closer to a significantly lower estimate of 2.1 percent.
Services sector
The last examination is of the growth rate of big sub-sectors within services.
The first sub-sector is wholesale and retail trade. According to the PBS, the growth rate of this sub-sector in 2025-26 is 3.7 percent, a significantly higher growth rate than in 2024-25 of only 0.5 percent.
The combined growth rate of the agricultural and industrial sector is higher in 2025-26. Further, there has been an almost 8 percent increase in the quantum of imports. As such, the growth rate of the wholesale and retail trade sector appears to be of the right magnitude.
The other large sub-sector in services is transport. It is reported to be having a growth rate of only 2.3 percent in the national income accounts. However, the data regularly published of monthly sales data by the Oil Companies Advisory Council (OCAC) reveals a different picture. Between July and April 2025-26, the sale of HSD oil has gone up by as much as 6.1 percent and that of motor spirit by 3.9 percent. Overall, the projected growth of consumption is close to 4.3 percent. This is also likely to be the higher growth rate of the transport sector in 2025-26.
Finally, we look at the growth rate of the public administration and social security sub-sector in 2025-26. The reported growth rate is high at 8.5 percent. This year and the last year growth rates are close to 8.5 percent, highest in the last six years.
A large component of the value added in this sector is overall employee remuneration. At the federal level, this is a large part of defence expenditure and the cost of running of civil government and pensions. At the provincial level, a large part of the current expenditure is also linked to payments to employees.
The information on fiscal operations by the Federal and the Provincial Governments is available up to the 3rd Quarter of 2025-26. The overall growth of the above-mentioned expenditures is 12.0 percent. This implies that with the rate of inflation at close to 7 percent, the real growth in the sub-sector, is likely to be closer to 5 percent. As such, the reported growth rate of 8.5 percent is on the high side.
The higher growth rate in the transport sector is neutralized by the lower growth in the public administration sector. As such, the growth rate of the services sector is derived at close to the PBS estimate of 4.1 percent.
Summary and conclusion
Overall, the above findings reveal a substantial growth rate variation in the larger sub-sectors in comparison with the PBS estimates. Lower growth estimates in 2025-26 have been reached in the livestock, manufacturing and public administration sub-sectors, while higher growth rates have been obtained in the major crops and transport sub-sectors.
The alternate estimates of sectoral growth are given in Table 2.
Overall, the GDP growth rate in 2025-26 appears to be closer to 3.3 percent. This is also between the estimated growth rate of 3.2 percent by the Annual Plan and 3.7 percent in the National Income Accounts prepared by the PBS. It represents a marginal improvement over the 2024-25 GDP growth rate of 3.2 percent. Hopefully, the economy will do better in 2026-27and achieve the GDP target growth rate in the Annual Plan of 4.0 percent in 2026-27.
Copyright Business Recorder, 2026
The writer is Professor Emeritus at BNU and former Federal Minister