ISLAMABAD - Economic activities had slowed down in the country as the large-scale manufacturing (LSM) industries growth contracted by 0.65 percent in first four months of the current fiscal year.

The LSM growth had declined by 0.65 percent in July-October period of the fiscal year 2018-19 as compared to the corresponding period of previous year, reported the Pakistan Bureau of Statistics (PBS) on Tuesday. However, the LSM growth went up by 0.95 percent during October 2018 as against the corresponding period of previous year.

The slowdown in LSM growth indicates that economic activities have decelerated in the country. The tightening of monetary policy and massive depreciation of the rupee has increased the cost of production for the big industries, which are posting negative growth.

“Taking a lead from the recent large scale manufacturing data, economic activity is expected to witness a notable moderation during FY19 – reflecting a short term cost of pursuing macroeconomic stability. The lagged impact of the 275 basis point increase in the policy rate since January 2018 and other policy measures is likely to contain domestic demand during the current fiscal year,” according to the State Bank of Pakistan. Furthermore, it added that initial estimates for major crops, except wheat, are expected to fall short of levels achieved in the last year. The slowdown in commodity producing sectors is expected to limit the expansion in the services sector as well. In this backdrop, SBP projects real GDP growth for FY19 at slightly above 4.0 percent.

The PBS computes the quantum index numbers of the LSM on the basis of latest production data of 112 items received from various sources, including the Oil Companies Advisory Committee (OCAC), Ministry of Industries and Production and provincial Bureau of Statistics. The LSM data, provided by the Ministry of Industries and Production for 36 items, showed growth of 0.56 percent during the first four months of the FY2019 over a preceding year. Similarly, the data provided by the provincial Bureaus of Statistics for 65 items showed negative growth of 0.75 percent over the same period. The output of 11 items, whose data is provided by the Oil Companies Advisory Committee, had decreased by 0.46 percent during the period under review.

As far as the main drivers of the LSM sector's growth during the period under review are concerned, engineering products sector recorded growth of 14.41 percent followed by rubber products that recorded 3.95 percent growth. Similarly, fertilizer sector grew by 2.96 percent and paper and board grew by 2.56 percent. Meanwhile, leather products, non metallic mineral products, chemicals and food, beverages and tobacco had also recorded growth during the period under review.

On the other hand, wood products recorded negative growth of 53.94 percent, coke & petroleum products’ down by 6.46 percent. Meanwhile, the growth of pharmaceuticals went down by 6.12 percent, iron & steel products by 4.87pc and electronics growth by 2.42 percent during July to November period of the current fiscal year.

In the automobile sector, the production of tractors went down by 6.57 percent, trucks 15.06pc and motorcycle production declined by 4.57pc. Meanwhile, production of buses had declined by 3.93 percent, light commercial vehicles 6.31pc during first five months of the ongoing fiscal year. However, production of jeeps and cars had enhanced by 7.14 percent.

In non-metallic mineral products, cement posted a growth of 1.95 percent. In the food, beverages and tobacco segment, an increase of 3.43pc was recorded in cooking oil production. Other item that had witnessed an increase of 0.28pc was tea blended.