LSM growth shrinks by over 13pc in April due to energy shortage, uncertainty

ISLAMABAD – Large-scale manufacturing (LSM) growth has been contracted by over 13 per cent in April this year as against March mainly due to the energy shortage and uncertainty on political as well economic fronts in the country.

The LSM, which was continuously showing handsome growth in last several months, has recorded negative growth of 13.3 percent in April 2022 as compared to March, according to the latest data of Pakistan Bureau of Statistics (PBS). However, the LSM has recorded growth of 10.7 percent in first ten months (July 2021 to April 2022) period of current fiscal year. The LSM has rebounded after months of a downturn on account of the Covid-19 pandemic, mainly in the automobile, construction, textile, food, chemicals, non-metallic mineral products and pharmaceutical sectors.

Accommodative fiscal and monetary measures continued in FY2022 provided incentives to the businesses to perform better. Thus, LSM picked up the momentum and staged the overall growth of during FY2022. The performance was broad based on the back of strong growth of high weighted sectors such as textile, food, wearing apparel, chemicals, automobile, tobacco, and iron & steel products. It is also pertinent to mention here that operationalization of special economic zones under CPEC in Nowshera, Pishin and Faisalabad further paved the way for fast tracked industrial development which is pivotal to achieve inclusive and sustainable economic growth. However, supply-side disruptions, which were originated from pandemic, are still in place due to emergence of new variants. Ukraine-Russia conflict has further escalated this disruption. Thus, internationally commodity prices are increasing significantly along with intense uncertainty in the market confidence. All these may result in severe challenges in LSM performance as industrial production is mainly dependent on import of capital goods. Thus, the future prospects of industrial sector are uncertain as risks still prevails owing to geopolitical environment, surge in energy prices, and new variants. According to the PBS data, wood products has increased by 134.9 percent, automobiles 48.2 percent, food 11 percent, tobacco 14.5 percent, textile 3.7 percent, furniture 227.5 percent, machinery and equipment 13.6 percent and iron and steel products 16.3 percent during July-April 2021-22 compared to the same period last year. The sectors showing decline during July-April 2021-22 compared to the same period of the previous year included rubber products 18.8 percent, non metallic mineral products 0.3 percent and other equipment 10.9 percent. As per the PBS data, the entire automobile sector, excluding trucks and LCVs, showed strong growth in April compared to the same period a year ago. Production of tractors had dipped by 11.9 percent and 4.5 percent in April this year. On the other hand, the production of cars surged by 32.3 percent, and buses by 33.3 percent. The production of motorcycles dipped by 11 7 percent. In the non-metallic mineral sector, the production of cement output dipped by 20.5 percent in April 2022. The production of glass plates and sheets had increased by 147.3 percent. In the steel industry, billets and ingots increased by 28 percent.

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