Pakistan’s manufacturing sector recorded a sharp recovery in FY2025-26, becoming one of the main contributors to economic growth, according to the Pakistan Economic Survey.
Manufacturing output grew by 6.6 percent during the year, compared with 2 percent growth in FY2024-25. Large-Scale Manufacturing (LSM) expanded by 6.1 percent, while Small-Scale Manufacturing registered growth of 8.5 percent.
The government attributed the improvement to lower inflation, a stable exchange rate, easier access to imported inputs, lower borrowing costs, and improving business sentiment.
Industrial growth was broad-based, with 16 of Pakistan’s 22 major manufacturing industries posting gains. Key contributors included food products, textiles, apparel, automobiles, petroleum products, beverages, and electrical equipment.
The Quantum Index of Manufacturing increased by 6.5 percent during July-March FY2025-26. Industrial production in March alone rose 11.1 percent year-on-year, reversing a 2.4 percent contraction recorded in the same month last year.
Overall, the industrial sector grew by 3.51 percent and played a significant role in supporting Pakistan’s 3.7 percent GDP growth during FY2025-26.
The survey notes that the recovery follows several years of pressure from high interest rates, import restrictions, and exchange-rate volatility that had weakened industrial activity. Policymakers expect manufacturing to remain a key source of growth as investment and economic activity continue to improve.
