Pakistan economic growth claims for the first quarter of FY26 have come under intense scrutiny after the Economic Policy and Business Development think tank questioned the credibility of the official numbers. While the National Accounts Committee approved a 3.71 percent Gross Value Added increase, critics argue that Pakistan economic growth during the quarter reflects accounting effects and higher imports rather than a real expansion in domestic productivity and business activity.
According to official data, agriculture grew by 2.89 percent, industry by a strong 9.38 percent, and services by 2.35 percent. However, the EPBD said Pakistan economic growth figures are difficult to reconcile with conditions on the ground. It warned that growth driven by imports, subsidies, and statistical adjustments may look impressive on paper but does little to strengthen the real economy or improve long-term stability.
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Pakistan Economic Growth Under Scrutiny as Think Tank Flags Structural Weaknesses
The think tank highlighted sharp contradictions between output estimates and trade data. Despite reported expansion in agriculture and food-related manufacturing, food exports dropped by nearly 26 percent during the quarter, while food imports surged by almost 19 percent. EPBD said this pattern weakens the Pakistan economic growth narrative, as rising domestic output should normally support exports instead of increasing reliance on imports.
Agriculture’s reported performance was also questioned. Flood-related disruptions had led many analysts to expect weak or negative growth, yet official figures showed expansion even though key crops declined. Cotton output fell, wheat had no contribution in the quarter, and important crops contracted overall. EPBD argued that such gaps suggest Pakistan economic growth may be overstated in certain agricultural sub-sectors.
In industry, the reported 9.38 percent growth was largely attributed to utilities, where electricity, gas, and water supply expanded due to heavy subsidies. These subsidies rose sharply during the quarter, inflating value addition without a matching increase in physical output. EPBD said this type of support distorts Pakistan economic growth by boosting numbers without improving efficiency or competitiveness.
Construction and manufacturing data showed similar weaknesses. Cement output rose, but construction relied heavily on imported machinery and equipment, indicating limited domestic linkage. Textile production and exports increased mainly through imported cotton and synthetic fibres, while local cotton-related activities declined. This reinforced concerns that Pakistan economic growth is increasingly assembly-led and dependent on foreign inputs.
Services growth remained modest and slowed compared to previous quarters, reflecting subdued demand across the economy. EPBD concluded that Pakistan economic growth is showing a widening gap between local production and trade performance, raising serious questions about sustainability. The think tank urged policy reforms that prioritize private-sector–led investment, reduced distortions, and a stable business environment to ensure that future Pakistan economic growth is real, durable, and driven by productivity rather than temporary support measures.
