Pakistan’s IT and Telecom Sector Contracts 28.7% in Q1 FY2025–26 as Mobile Revenues Decline

Pakistan’s IT and Telecom Sector Contracts 28.7% in Q1 FY2025–26 as Mobile Revenues Decline

Pakistan’s IT and Telecom sector recorded a sharp contraction of 28.70% in the first quarter of FY2025–26, according to the latest data released by the Pakistan Bureau of Statistics (PBS). The decline marks one of the steepest quarterly downturns for the sector in recent years and highlights growing pressure on mobile and telecom operations.

The contraction stands in contrast to overall GDP growth of 3.71% during the same period, underscoring sector-specific challenges despite broader economic recovery.

Mobile Revenue Decline Drives Sector-Wide Slowdown

PBS data shows that the primary reason behind the downturn was a significant fall in mobile company output, which serves as a core performance indicator for the IT and telecom industry.

While IT exports continued to grow in Q1 FY2025–26, their contribution is reflected only in annual national accounts, not quarterly data. As a result, the sector’s quarterly performance appears weaker, amplifying the impact of declining telecom revenues.

Industry experts note that although the IT and Telecom sector posted positive growth in FY2024–25, the latest figures point to structural challenges within mobile and telecom operations, including pricing pressures and slower revenue expansion.

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Strong GDP Growth Fails to Offset Telecom Weakness

Despite the IT and telecom contraction, Pakistan’s economy posted broad-based growth across multiple sectors in Q1 FY2025–26:

Agriculture Shows Modest Growth

The agriculture sector expanded by 2.89%, though declines were recorded in certain key crops. The “Other Crops” category fell by 6.37%, mainly due to shortages in green fodder.

Industrial Output Surges on Manufacturing Gains

The industrial sector grew by 9.38%, supported by strong manufacturing performance:

Automobiles: 84.60% growth

Transport equipment: 40.73%

Non-metallic mineral products: 13.86%

Rubber products: 14.10%

However, machinery and equipment production declined by 14.08%, while mining and quarrying fell by 4.13%, largely due to reduced gas and crude oil output.

Services Sector Records Mixed Performance

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The services sector grew by 2.35% overall:

Wholesale and retail trade: 3.08%

Transport and storage: 3.16%

Information and Communication: –28.70%, reflecting the IT and telecom slowdown

Public Administration and Social Security expanded by 8.08%, indicating stable government operations.

National Accounts Committee Approves Revised Economic Data

The 115th meeting of the National Accounts Committee (NAC), chaired by the Secretary of the Ministry of Planning, Development and Special Initiatives, approved:

Revised FY2024–25 GDP growth at 3.09%, up from 3.04%

Q1 FY2025–26 GDP growth of 3.71%

According to PBS, Pakistan’s economy reached Rs.113.93 trillion (US$407.9 billion), with per capita income at Rs.506,736 (US$1,814). Updated per capita figures are expected following revised population estimates based on the 2023 census.

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What the IT and Telecom Decline Means for Pakistan’s Digital Economy

The steep fall in IT and telecom output has raised concerns about the sector’s resilience and future growth trajectory. Analysts stress the need for:

Policy incentives for mobile operators

Supportive frameworks for telecom infrastructure investment

Stronger alignment between IT exports and domestic digital services

Without targeted intervention, continued weakness in telecom revenues could slow Pakistan’s digital transformation and impact broader economic modernization efforts.