LSM growth declines by 5.93pc during July-November

ISLAMABAD       –        The large-scale manufacturing (LSM) is continually recording negative growth that may dent the overall economic growth during current fiscal year.

The LSM growth has declined by 5.93 percent during five months (July to November) of the current fiscal year, which also shows that economy has slowed down across various sectors in the ongoing fiscal year. Meanwhile, the LSM sector has recorded negative growth of 4.61 percent in the month of November over same period of last year, according to the latest data of Pakistan Bureau of Statistics (PBS). The LSM, which constitutes 80 percent of manufacturing and 10.7 percent of the overall GDP, had recorded negative growth for eleventh months in a row amid sluggish economic activities in the country.

The official data showed that growth of big industries like food, beverages, pharmaceutical, chemical, fertilisers, leather and iron, automobiles and steel sectors had declined in first five months of the ongoing fiscal year. Data reveal various factors that led to the slowdown including lower Public Sector Development Programme expenditures compared to last year, deceleration in the private construction activities and consumer spending on durable goods.

The government had set LSM target of 3.1 percent for the year 2019-20. However, the government might not achieve the LSM growth target due to the performance of major industries in first four months of the current fiscal year. According to the PBS, production data of 11 items from Oil Companies Advisory Committee had registered a negative growth of 0.8 percent in July to November period of the year 2019-20. Similarly, the LSM data, provided by the Ministry of Industries and Production for 36 items, had also shown negative growth of 3.63 percent during the period under review. However, the data provided by the provincial Bureaus of Statistics for 65 items had recorded negative growth of 1.49 percent over the same period.

The negative growth is mainly the outcome of dip in production of automobiles that went down by 37.75 percent and iron and steel products by 13.82 percent. Similarly, production of coke and petroleum products had declined by 12.19 percent. Meanwhile, production of pharmaceutical had decreased by 8.38 percent, followed by electronics, whose production declined by 16.22 percent. Production of food, beverages and tobacco had also gone down by 6.57 percent. The data showed that production of chemicals decreased by 5.46 percent.

Meanwhile, according to the PBS data, wood products had recorded growth of 55.13 percent; fertilizers 8.04 percent, engineering products 19.04 percent and leather products had also recorded growth of 2.84 percent during the period under review.

On a year-on-year basis, almost all vehicles in the auto sector posted decline in previous fiscal year. Policy measures like regulatory restrictions prohibiting non-filers from purchase of vehicles, and increase in interest rates dented the demand in the automobile segment to some extent. Furthermore, significant depreciation of PKR increased the cost of production, resulting in escalated prices and dampening the demand further. In auto sector, tractors production went down by 34.51 percent, light commercial vehicles 33.66 percent, trucks 55.63 percent, jeeps and cars 47.6 percent and motorcycles 16.26 percent during the period under review.


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