(Bloomberg) -- Pakistan’s economic growth weakened in the fiscal second quarter after record high interest rates impacted businesses and reduced consumer demand.

Gross domestic product expanded 1% in the October-December period from a year ago, according to data from the Pakistan Bureau of Statistics. The reading is lower than the median estimate of 1.8% in a Bloomberg survey. The National Account Committee also revised upward economic growth for the previous quarter to 2.5% from 2.13% earlier, the PBS said in a statement.

Growth in agriculture quickened to 5.02% from a year ago, while industry contracted 0.84%. The services sector grew 0.01%.

The South Asian country succeeded in averting a sovereign default last year, but the economy has remained fragile. Prime Minister Shehbaz Sharif, who returned to power after contentious elections in February, is seeking a new loan from the International Monetary Fund to support the economy and bolster Pakistan’s foreign exchange reserves. 

While the IMF has cut its GDP forecast for the current fiscal year to 2% from 2.5% on weaker domestic demand, the State Bank of Pakistan sees better farming and industrial output supporting the economy. Pakistan’s economy saw a rare contraction last fiscal year of 0.17%. 

The nation remains heavily reliant on IMF aid with $24 billion in external financing needs in the fiscal year starting July, about three times its foreign exchange reserves.

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