By Farooq Awan

Global economic growth showed signs of acceleration in February 2026, with output expanding at one of the fastest rates since the pandemic, driven largely by strong performance in the services sector and improved manufacturing activity, according to the Monthly Economic Update & Outlook released by the Finance Division.

The report indicates that global growth momentum strengthened prior to the escalation of geopolitical tensions, with February recording one of the strongest expansions since May 2024.

The upturn was supported by a robust increase in new business, marking the largest monthly rise since May 2023, reflecting improved demand and stronger trade activity across major economies.

The services sector remained the primary driver of growth, while manufacturing activity also showed a notable improvement. Production growth in manufacturing reached its strongest level since December 2021, indicating a recovery in industrial output.

Despite the increase in output and demand, employment levels remained largely unchanged, as businesses continued to focus on cost control amid uncertainty about future conditions.

Regional growth trends showed variation across major economies. Japan emerged as the leading performer among developed economies, while economic activity improved in both Asia and Europe.

In contrast, growth in the United States showed signs of cooling, while Canada continued to experience a decline in economic activity.

Among emerging markets, China recorded the most notable improvement. Output growth in China accelerated to its fastest pace since May 2023, reflecting stronger domestic activity and improved industrial performance.

The report highlights that the acceleration in global growth was driven by a combination of rising demand, increased production and improved trade flows.

At the same time, global price pressures showed an upward trend. Output price growth reached its highest level since May 2025, driven by rising labour costs and higher raw material prices.

Commodity markets displayed mixed dynamics during the period. While food prices increased modestly, other categories such as beverages and metals recorded declines.

Food prices rose by 2.1 percent, while raw materials increased by 1.5 percent and fertilizers by 6.5 percent. In contrast, beverage prices declined sharply by 15.6 percent, and metals fell by 1.7 percent.

The FAO Food Price Index averaged 125.3 points in February 2026, rising slightly compared to the previous month after several months of decline.

Overall, the data indicates that global economic activity strengthened in early 2026, supported by services-led growth and improved manufacturing performance, although cost pressures and regional variations continue to shape the outlook.

Credit: INP-WealthPk