ISLAMABAD: The large-scale manufacturing index (LSMI) declined 3.28 percent in the first month of the current fiscal year, the Pakistan Bureau of Statistics (PBS) reported Friday.
Large-scale manufacturing production has declined for eight months in a row in the midst of poor performance in the food, beverage, textile, pharmaceutical, chemical, fertilizer, leather and iron and steel sectors, which increases the fear of mass layoffs in the industrial sector
In the last fiscal year, the LSMI sectors fell 3.64pc against the target growth of 8.1pc, while the government set the LSM target of 3.1pc for the year 2019-20.
According to the 2019-20 Annual Plan, the industry is expected to increase the pace in 2019-20 with the implementation of the planned policy measures. The plan anticipates private sector investment to lead the reactivation of economic activity with the help of the necessary normative and regulatory support through the public sector.
However, in the context of high interest rates, it is unlikely that the private sector can trigger economic expansion or increase investment.
Regarding the sector, the production data of 11 articles under the Petroleum Companies Advisory Committee registered a negative growth of 1.71pc, while 36 articles under the Ministry of Industries and Production were reduced by 3.1pc. However, 65 articles from the provincial statistics offices registered an insignificant growth of 1.53pc.
Mediocre performance in the industrial sector reflected the general economic slowdown in several sectors in the current fiscal year.
However, officials believe that despite the negative growth in LSMI, prospective growth in small and medium enterprises is expected to remain at the projected levels. The PBS, however, did not map trends in the SME sector.
LSMI constitutes 80{7be40b84a6a43fc4fae13304fce9a2695859798abfc41afd127b9f8b21c5f9c5} of manufacturing and 10.7{7be40b84a6a43fc4fae13304fce9a2695859798abfc41afd127b9f8b21c5f9c5} of total GDP. In comparison, small-scale manufacturing represents only 1.8pc of GDP and 13.7pc in manufacturing.
Data from LSMI reveal that several factors led to the slowdown, including lower expenses of the Public Sector Development Program compared to last year, the slowdown of private sector construction activities and consumer spending on durable goods.
The impact was most noticeable in the industries allied to construction, as the demand for housing moderated amid rising prices for construction materials and the higher financing cost. Certain sector-specific problems also contributed to the decrease in LSMI.
Car prices witnessed multiple upward revisions due to currency depreciations, which kept potential buyers at bay. On an annual basis, the automotive sector registered negative growth in almost all variants during the first month of the current fiscal year.
The pharmaceutical sector also suffered due to a considerable delay in regulatory price adjustments. The price issue added to the weakening of the local currency, which added to the anguish of an import-dependent sector. In the pharmaceutical sector, syrup production decreased 32.88pc and 1.69pc tablets, respectively.
Similarly, the lower production of sugarcane and the advance of inventories last year further attenuated the prospects of the sugar industry. In non-metallic mineral products, cement production decreased slightly by 0.13pc in July.
On the other hand, the production of cooking oil and mixed tea was submerged at 5.46pc and 17.65pc, respectively. However, the production of shortening increased by 1.91pc in July of fiscal year 19 on an annual basis.
Posted on Dawn, September 21, 2019
Source: https://www.dawn.com/news/1506463/large-scale-manufacturing-shrinks-for-eighth-month-in-row
