LSM contracts 1.72pc in eight months

ISLAMABAD    –   The large-scale manufacturing (LSM) index posted negative growth of 1.72 percent during eight months of current fiscal year.

The LSM growth had declined by 1.72 percent in July-February period of the fiscal year 2018-19 as compared to the corresponding period of previous year, reported the Pakistan Bureau of Statistics (PBS) on Wednesday. Similarly, the LSM growth went down by 1.49 percent during February as against the corresponding period of previous year.

The slowdown in LSM growth indicates that economic activities have decelerated in the country. The Asian Development Bank (ADB) in its recent report noted that Pakistan’s supply side is already showing signs of slowdown. Agriculture is expected to underperform the 3.8 percent growth target for FY2019 after water shortages struck as wet season crops were being sown. Large-scale manufacturing (LSM) reversed 6.6 percent growth in the first half of FY2018 to decline by 1.5 percent in the same period of FY2019 as domestic demand contracted and rising world prices crimped demand for raw materials. Contraction hit all key categories, including a 0.2 percent decline in textiles.

A slowdown in agriculture and industry as domestic demand shrinks will keep growth in services subdued. The Asian Development Bank (ADB) Wednesday forecasted that Pakistan’s GDP growth would decelerate to 3.9 percent during current fiscal year (FY2019) from the government’s target of 6.2 percent.

The LSM data, provided by the Ministry of Industries and Production for 36 items, showed negative growth of 1.63 percent during the first eight months of the FY2019 over a preceding year. Similarly, the output of 11 items, whose data is provided by the Oil Companies Advisory Committee, had decreased by 0.34 percent during the period under review. However, the data provided by the provincial Bureaus of Statistics for 65 items showed nominal growth of 0.25 percent over the same period.

The negative growth is mainly the outcome of dip in production of iron and steel products 10.26 percent, pharmaceutical products 8.67 percent, followed by automobiles 6.11 percent, coke & petroleum products 5.5pc, chemicals 3.92pc, non metallic mineral products 3.87pc, paper and board by 2.2 percent and food and beverages & tobacco 1.55pc during July to February period of the current fiscal year. Meanwhile, rubber products had also recorded growth of 0.13 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, electronic products sector recorded growth of 34.63 percent, followed by wood products that grew by 17.84 percent.

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