Pakistan Economic Survey (PES) report has revealed some interesting insights regarding the country’s sector-wise growth.
According to the document, the Large Scale Manufacturers’ (LSM) sector observed a 10.4 percent growth since the 2015-16 fiscal year (FY2015-16). The main contributor to that is the growth in Pakistan’s auto sector.
The report shows that the auto sector grew by 54.10 percent since FY2015-16, recording the highest growth rate in the LSM sector. The growth is due in large part to the Automotive Development Policy (ADP) 2016-21, which facilitated the arrival of several new players in the market.
Furthermore, LSM sector growth amounts to 9.24 percent of the country’s Gross Domestic Product (GDP). Although the auto sector’s individual contribution has not been highlighted, its tremendous growth rate implies a significant role in the overall growth.
Also, the transportation and storage industry posted a growth of 5.4 percent. Road transport, in particular, recorded 4.99 percent growth due to the arrival of new commercial vehicles.
The previous government formulated the Automotive Industry Development and Export Plan (AIDEP) 2021-26, which focused on the complete indigenization of vehicle production. It included several incentives for carmakers and electric vehicle (EV) startups to start producing vehicles and their parts locally.
However, amid the ongoing economic turmoil, the interim government has proposed an increase in taxes for locally assembled as well as completely built-up (CBU) cars to pin down the soaring import bill.
Issues such as rising raw material costs, shipping costs, fuel costs, and local currency depreciation have become an obstacle to the auto industry’s progress. Those added with the incoming tax rate hikes will make the cars more expensive, which is likely to hinder the auto-sectors growth.
The industrialists and the public are eagerly awaiting the new budget as it will decide the fate of all sectors and the economy.