ISLAMABAD: (Finance Reporter) – Pakistan’s domestic demand showed a broad-based recovery during FY26, with momentum continuing into the opening month of FY27, although the pace remained uneven across major sectors.
The latest indicators point to stronger activity in automobiles, petroleum, cement and mobile phones, while fertilizer demand recorded a modest decline after posting significant growth during the previous fiscal year.
Automobile Demand Leads Recovery
The automobile sector remained the strongest performer, with demand increasing 30% during FY26 before accelerating to 42% year-on-year in July.
The sharp rise points to improving consumer confidence and potentially better financing conditions, supporting expectations of stronger activity in the sector.
Petroleum Demand Turns Positive
Petroleum demand also recorded a notable improvement. After remaining broadly unchanged during FY26, demand increased 23% year-on-year and 20% month-on-month in July.
The increase suggests stronger mobility, transportation activity and overall economic movement.
Cement Demand Remains Firm
Cement demand continued its positive trend, rising 8% during FY26 and another 6% year-on-year in July.
The performance is consistent with improving construction activity and infrastructure-related demand.
Mobile Phone Demand Improves
Mobile phone demand also strengthened, recording 9% year-on-year growth in July along with a significant monthly rebound.
The increase points to improving discretionary consumption and a gradual recovery in household spending.
Fertilizer Sector Shows Temporary Weakness
Fertilizer was the main exception to the broader trend. After registering strong 17% growth in FY26, demand fell 4% year-on-year in July.
The decline may indicate some sector-specific softness following a particularly strong performance during the previous fiscal year.
Broader Economic Recovery Emerging
Domestic demand indicators measure sales, offtake and consumption, while Large-Scale Manufacturing (LSM) tracks industrial production. The two indicators are increasingly pointing in the same direction, with recovering demand being accompanied by a response from productive activity.
LSM expanded by around 5% in FY26, adding to evidence that economic activity is gradually gaining strength.
Combined with improving private-sector credit and business confidence, the latest trends suggest that Pakistan’s economic recovery is becoming broader and increasingly visible across the real economy.
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