Pakistan’s large-scale manufacturing industries’ (LSMIs) overall output cumulatively plunged by 10.17% in FY20 year-on-year as compared to 3.64% in FY19 as almost all the major manufacturing sectors witnessed a sharp decline during the period.
LSM saw a huge fall during the last few months due to the COVID-19 lockdown. The closure of local as well as international markets led to the cancellation of orders. However, when the lockdown was lifted, some industries resumed their operations in order to meet the slowly growing demand. It is worth mentioning that even before the pandemic, the industry output was low.
All three data collection authorities registered a decrease in production in July-June FY2020 over the preceding fiscal year. Ministry of industries, measuring output trend of 36 items, recorded a 7.43 percent decline in production. Oil Companies Advisory Council, logging outputs of 11 oil and petroleum products, measured 1.21 percent year-on-year fall in outputs during the period under review. Provincial bureau of statistics, counting production of 65 products, logged 1.53 percent negative growth.
The sectors which saw an increase in production during the FY20 were fertilizers (0.24%) Paper and Board (0.08%) and Rubber Products (0.0.01%) as compared with FY19.
The decline in output in FY20 as compared with the previous year was triggered by Textile that contracted by (10.37%), Petroleum products (20.10%), automobiles (44%), engineering products (19%), Electronics (34.82%), food beverages and tobacco (2.69%), iron and steel products (17.36%), chemicals (7.76%), Pharmaceuticals (2.69%), Wood products (44.25%), leather products (9.09%) and nonmetallic mineral products (2.16%).
LSMI Output bouncing back
According to the data released by the Pakistan Bureau of Statistics (PBS) the output of LSMI decreased by 7.74% in June 2020. However, on the month on month basis, June 2020 showed a 16.81% increase as compared to May 2020.
The LSMI output, however, increased by 20.50% for May 2020 as compared to April 2020 due to low base.
A.A.H Soomro, managing director at Khadim Ali Shah Bukhari Securities told ProPakistani,
The recovery is a sequential improvement from low base as the Government of Pakistan decided to keep the economic ticking under the smart lockdown strategy. The improvement is further expected as August onwards more sectors have opened, textile operations are improving and as low interest rate spurs further consumption.
The consistent growth in the production of LSM not only is affecting its share in the GDP but it has also is affecting the SMEs related to the different sectors. Further, the government revenue streams through taxation also dropped and massive retrenchment of human resources was reported in the various sector which is ultimately pushing the country towards poverty.