Pakistan’s manufacturing sector posted a strong recovery in FY2025–26, emerging as a key contributor to overall economic growth, according to the Economic Survey FY26.
The sector expanded by 6.6 percent, compared to 2 percent growth in the previous year. Large-Scale Manufacturing (LSM), the main driver of industrial output, grew by 6.1 percent, while Small-Scale Manufacturing increased by 8.5 percent.
Officials linked the recovery to lower inflation, improved exchange rate stability, easing monetary conditions, better raw material availability, and improved business sentiment.
Industrial performance was broad-based, with 16 out of 22 major sectors recording growth. Strong gains were seen in food processing, textiles, apparel, automobiles, petroleum products, beverages, and electrical equipment.
The Quantum Index of Manufacturing rose by 6.5 percent during July–March FY2026. On a year-on-year basis, industrial output jumped 11.1 percent in March, compared to a 2.4 percent contraction in the same month last year.
Overall, the industrial sector grew by 3.51 percent, contributing significantly to Pakistan’s 3.7 percent GDP growth during the year.
The survey highlights that the recovery follows a difficult period marked by high interest rates, import restrictions, and currency volatility that had weighed on industrial activity.
Officials say sustained policy stability, improved energy supply, and rising investment will be key to maintaining industrial momentum in the coming years.