Pakistan IT and Telecom Sector Shrinks 28.70% in Q1 FY2025-26 Amid Mobile Revenue Drop

The Pakistan Bureau of Statistics (PBS) has reported a startling 28.70% contraction in the Information Technology and Telecommunication sector during the first quarter of FY2025-26, signaling one of the sharpest declines in recent years.

This slump contrasts sharply with the broader economy, which recorded a GDP growth of 3.71% in Q1 FY2025-26, driven by positive performances in Agriculture (2.89%), Industry (9.38%), and Services (2.35%).

IT and Telecom Sector Faces Major Setback

The decline in the IT and Telecom sector is primarily attributed to a significant drop in the output of mobile companies, which serve as a key performance indicator for the industry. While IT exports have continued to grow in Q1, their impact is reflected only in the annual national accounts rather than quarterly figures, intensifying the apparent contraction.

An industry analyst noted, “Although the sector had shown positive growth in FY2024-25, the Q1 figures for FY2025-26 highlight structural challenges within mobile and telecommunication operations.”

Economic Performance Across Sectors

Other sectors showed mixed results:

• Finance & Insurance: Achieved a robust growth of 10.36%, highlighting resilience in financial services.

• Agriculture: Registered modest growth at 2.89%, though key crops recorded declines, with ‘Other Crops’ falling by 6.37% due to green fodder shortages.

• Industry: Expanded by 9.38%, driven by manufacturing growth in automobiles (84.60%), transport equipment (40.73%), non-metallic mineral products (13.86%), and rubber products (14.10%). Machinery and equipment production, however, declined by 14.08%. Mining and quarrying recorded a 4.13% fall, mainly due to reduced gas and crude oil output.

• Services: Overall growth stood at 2.35%. Wholesale and retail trade increased by 3.08%, and transport and storage by 3.16%, while the Information and Communication sub-sector fell sharply by 28.70%.

The Public Administration and Social Security (general government) sector grew by 8.08%, reflecting stable government operations.

National Accounts Committee Approves Updated Figures

The 115th meeting of the National Accounts Committee (NAC), chaired by the Secretary of the Ministry of Planning Development, approved the updated annual growth rates for FY2024-25 and the Q1 GDP growth for FY2025-26. The revised annual GDP growth for FY2024-25 now stands at 3.09%, slightly up from the previous estimate of 3.04%.

According to PBS data, Pakistan’s overall economy reached a size of Rs.113.93 trillion (US$407.9 billion), with per capita income at Rs.506,736 (US$1,814). Revised per capita income figures from 2016-17 onwards are expected after updated population projections based on the 2023 census.

Implications for IT and Telecom Stakeholders

The sharp contraction in IT and Telecom output raises concerns over sectoral resilience and long-term growth. Analysts emphasize the need for immediate policy interventions, including incentives for mobile operators and support for emerging IT exports, to stabilize the sector and prevent further negative impacts on Pakistan’s digital economy.