Amir Khan

In a tragic turn of events concerning Pakistan's economic outlook, the Large-Scale Manufacturing (LSM) sector experienced a year-on-year decrease of 1.09 percent in the initial quarter of the ongoing fiscal year, reports WealthPK. According to the Pakistan Bureau of Statistics, the decline in LSM gathered pace when analysed on a month-on-month basis, with July witnessing a more pronounced contraction of 3.62 percent. The latest figures underscore a worrisome trend, as LSM production has been mired in negative growth since August 2022. The FY2023 paints a grim picture of the LSM sector, with a staggering year-on-year contraction of 10.26 percent in stark contrast to the previous fiscal year when the sector expanded by 11.7 percent. These production estimates for LSM industries are based on the new base year of 2015-16. “One of the distressing consequences of downturn in major industries during FY23 has been a significant surge in job losses. Reduced production capacity has left countless individuals unemployed, signalling a grim outlook for the labour market,” said a member of the executive team in the Ministry of Industries and Production while talking with WealthPK on the condition of anonymity.

He said the decline in LSM could be attributed chiefly to a slowdown in production in the textile and clothing sectors, particularly those focused on exports. In July, textile sector production contracted by a substantial 22 percent year-on-year. Notable negative growth was observed in yarn (29.88 percent) and cloth (17.52 percent) segments, while garments managed to eke out a nominal growth with a 30.84 percent increase. He added that the food sector showed some positive signs, with wheat and rice production increasing by 6.91 percent, cooking oil by 22.84 percent, vegetable ghee by 0.29 percent, and blended tea by a substantial 46.58 percent. However, the petroleum products industry posted a negative growth of 2.26 percent in the first month of the fiscal year, primarily due to the decline in the production of petrol and high-speed diesel. Continuing, he said, "The auto sector was hit hard, experiencing 66.11 percent slump in July, as the production of almost all types of vehicles plummeted.

Iron and steel production also witnessed a notable decline of 2.66 percent, and electrical equipment production dropped significantly by 22.38 percent.” On a more positive note, fertilizer production surged by an impressive 26.06 percent, while rubber items saw a substantial growth of 10.24 percent. The pharmaceutical sector also stood out with an impressive increase of 54.22 percent. These statistics shed light on the formidable challenges facing Pakistan's manufacturing sector, raising serious concerns about the nation's economic trajectory in the coming months. In July, the production of 16 sectors contracted, while only eight managed to post marginal increases, emphasizing the widespread nature of the current economic challenges. With these concerning trends, Pakistan faces an uphill task in revitalizing its manufacturing sector and stabilizing its economic trajectory. The policymakers and industry leaders will need to navigate these challenges diligently to foster a more robust and resilient industrial landscape in the years ahead.

Credit: INP-WealthPk