ISLAMABAD: Pakistan’s manufacturing and mining sectors recorded strong growth during FY26, helping support the country’s broader economic recovery despite global economic challenges. According to the Pakistan Economic Survey FY26, the two sectors contributed significantly to economic activity and strengthened industrial output across multiple segments.
Manufacturing Sector Leads Economic Recovery
The manufacturing sector expanded by 6.6% in FY26, compared with 2.0% growth in the previous fiscal year. The recovery was largely driven by Large-Scale Manufacturing (LSM), which accounts for 67.4% of the manufacturing sector. LSM grew by 6.1%, reversing the 0.7% contraction recorded a year earlier.
The survey attributed the improvement to a supportive macroeconomic environment and lower borrowing costs following a reduction in the policy rate to 10.5% by December 2025. Although the rate later increased to 11.5% in April 2026, industrial activity maintained momentum.
Meanwhile, Small-Scale Manufacturing posted growth of 8.5%, while slaughtering activity increased by 6.2%. Growth remained broad-based, with 16 of 22 industrial groups reporting positive performance.
The food sector expanded by 9.8%, supported by strong growth in sugar and bakery products. Similarly, the coke and petroleum products segment grew by 10.9% due to higher demand for fuel products.
Auto and Mining Sectors Post Strong Gains
The automobile industry emerged as the strongest performer, recording growth of 61.7%. Passenger car production increased by 51.3%, while two and three-wheeler production rose by 31.4%. To sustain this momentum, the government introduced the New Energy Vehicle Policy 2025-2030, targeting a 30% market share for new energy vehicles by 2030.
In contrast, pharmaceutical production declined by 5.1%, while iron and steel output fell by 6.3%.
The cement industry remained resilient, with total dispatches reaching 38.54 million tonnes, up 9.7% from the previous year. Domestic construction demand continued to support the sector’s growth.
Pakistan’s textile and apparel industry maintained stability despite global market pressures. Textile and apparel exports edged down by 0.5% to $13.58 billion during the first nine months of FY26. However, apparel exports increased by 1.1%, while cotton yarn exports rose by 4.4%.
Furthermore, the mining and quarrying sector returned to growth after four consecutive years of contraction. The sector expanded by 0.4%, driven by a 164.8% increase in magnesite extraction, a 109.9% rise in rock salt production, and a 67% increase in gypsum output.
Provincial governments also introduced reforms and investment initiatives to modernize mining operations and promote value addition across the sector.
