The Pakistan Bureau of Statistics reported that the April-to-June growth rate represents a significant deceleration from the 4.42% expansion observed in the previous quarter. While the full fiscal year maintained a growth rate of 3.65%, the fourth quarter served as a sobering pivot point. Industrial output bore the brunt of the instability, contracting by 4.7% as energy costs spiraled out of control.
Pakistan GDP Growth Stalls as Hormuz Crisis Cripples Energy Supply
Pakistan’s economic recovery has hit a wall, with GDP growth plunging to 2.0% in the final quarter of fiscal year 2026. The sharp slowdown, which fell well below the 3.5% projected by analysts, highlights the vulnerability of a nation struggling to secure essential fuel amid mounting geopolitical turmoil in the Middle East.
Disruptions at the Strait of Hormuz have severed the flow of natural gas from Qatar and the UAE, forcing the country to rely on expensive spot-market purchases. With the state-owned LNG importer warning of severe shortages throughout the winter, the government faces an additional import bill exceeding $1 billion. While agriculture and services managed to eke out growth above 3.5%, the energy-dependent industrial sector remains trapped by external supply shocks.
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