During the first five months of the current financial year (July-November 2019), the country’s Large Scale Manufacturing (LSM) has witnessed a decline of 5.93% according to the Pakistan Bureau of Statistics (PBS).
According to PBS’s Provisional Quantum Index Numbers of Large Scale Manufacturing Industries (LSMI), LSM’s output reduced by 4.61% for November 2019 as compared to November 2018.
According to PBS, the provisional quantum of LSM for September 2019, with the base year 2005-06, has been developed on the basis of the latest data supplied by agencies such as the Oil Companies Advisory Council (OCAC), Ministry of Industries and Provincial Bureau of Statistics (BOS).
According to PBS, LSM recorded a decline in July-November 2019-20 compared to July-November 2018-19 for the following sectors
- Automobile industries 37.75%
- Iron and steel production 13.82%
- Coke and petroleum products 12.19%
- Electronics 16.22%
- Pharmaceuticals 8.38%
- Food, beverages, and tobacco 6.57%
The auto sector, which has seen a massive decline in sales over the last few quarters, witnessed multiple upward price revisions due to currency depreciation that has kept the buyers at the bay.
The sectors which showed an increase in production during July-November 2019 included:
- Textile 0.27%
- Non-metallic mineral products 1.91%
- Fertilizers 8.04%,
- Leather products 9.47%
- Engineering products 1.46%
- Wood products 55.13%
- Rubber products 2.21%
Ossama Rizvi, an economic and geopolitical analyst says
As I have said before, we need to gradually start reducing the interest rates. At the same time, new and improved technology is required for increased productivity along with introducing operational innovations. All this is a long term solution. The immediate one is to reconsider our Energy mix and hence reducing down the cost of doing business, providing incentives to the sector and finally reducing interest rates.
During July-November 2019-20 as compared with same period of last year, growth of 11 items related to OCAC industries witnessed a decline of 12.19% from 116.16 points to 102.09 points, 36 items under the Ministry of Industries registered a negative growth of 5.61% from 125.10 points to 118.08 points and 65 items related to provincial BOS showed negative growth of 5.21% from 178.88 points to 169.56 points.
LSMI also witnessed a reduction of 3.78 percent on a month on month (MoM) basis in November compared to October 2019 from 133.38 points to 128.34 points.
On a monthly basis, Oil Companies Advisory Council (OCAC) related industries registered a reduction of 0.23%, Ministry of Industries related LSM industries recorded negative growth of 3.88% and the Provincial Bureau of Statistics (BOS) related industries registered a decline of 0.32%.
The lackluster performance in the industrial sector reflects an overall economic slowdown in the ongoing fiscal year.