Muhammad Asad Tahir Bhawana

Large-scale manufacturing (LSM) experienced a negative trajectory during the July-May period of the previous financial year 2022-23, with a noticeable decline of 9.87%. This decline can be attributed to various factors such as supply chain disruptions, inflationary pressures leading to higher input prices, and a persistent contractionary policy stance at the domestic level, aimed at addressing macroeconomic imbalances, according to a report published by the Ministry of Finance.

On a year-on-year (YoY) basis, LSM dropped by 14.37% in May 2023. However, on a month-on-month (MoM) basis, there was a growth of 5.88% during the same period. During this period, four sectors managed to achieve positive growth, namely wearing apparel, leather products, furniture, and others (football). Conversely, the automobile sector encountered significant challenges due to an unfavourable economic environment. The total production in the automobile sector witnessed a steep decline of 37.4% in FY23 with total sales also dipping by 37.8%. Notably, cars, tractors, and trucks & buses recorded major declines, with car production and sales decreasing by 55% and 58.7%, tractors production and sales decreasing by 46.1% and 47.5%, and trucks & buses production and sales decreasing by 40.3% and 41%, respectively. The sales of petroleum products experienced a substantial decline of 26% in FY23, reaching 16.6 million tonnes, down from 22.6 million tonnes during the same period last year.

Specifically, in June 2023, oil sales witnessed a significant decline of 31% on a YoY basis, amounting to 1.3 million tonnes. Furthermore, total cement dispatches declined by 15.7% to 44.579 million tonnes in FY23. In June 2023, demand for cement dispatches also declined by 22.8% to 4.063 million tonnes (compared to 5.264 million tonnes in June 2022). Local cement sales by the industry experienced a substantial decline of 30% in June 2023, amounting to 3.487 million tonnes. In contrast, exports of cement surged by 102.6% during the same period from 284,471 tonnes to 576,309 tonnes. Despite facing challenges such as a considerable decline in imports, a slowdown in LSM, and overall economic activity, the government successfully maintained a growth rate of 16.6% in tax collection by effectively implementing its resource mobilisation strategy through the Federal Board of Revenue. Additionally, non-tax revenue also exhibited a substantial growth of 31%.

Credit: INP-WealthPk