After five months of declining growth, Pakistan’s large industries grew 7.6% in the first seven months of the current fiscal year.
The Pakistan Bureau of Statistics (PBS) recorded 7.6% growth in large-scale manufacturing industries from July to January of fiscal year 2021-22.
It was the PBS’s second growth figure for the new base year of 2015-16. Compared to the 2005-06 base, the new base covers more industries and goods.
Using the old method, LSM growth was 3.9 percent in the first seven months of the current fiscal year.
After five months of decline, the trend paused in January. In January, LSM growth climbed 8.2% year-on-year.
Large industries generate a lot of income and jobs, so any change in their growth affects the government and corporate sentiment.
Pakistan’s Prime Minister Imran Khan announced a tax amnesty programme for industrialists, allowing them to legalise their illegally obtained funds by eliminating 49% of their taxes.
However, the IMF has objected to the third tax amnesty scheme in as many years, citing a lack of tax compliance culture. The percentage of LSM has been declining as industrialists seek refuge in real estate and the stock market.
The administration expects a 4.8% GDP growth this fiscal year. The IMF projects Pakistan’s economic growth at 4%, which is respectable but falls short of the 8% required to create jobs for all new entrants.
The government’s plan to cut the Public Sector Development Programme (PSDP) by Rs300 billion may also harm economic growth.
LSM data is gathered from three sources. The OCAC found that growth in 36 items was practically flat at 0.5% in the first seven months of the current fiscal year.
The Ministry of Industries recorded a 6.9% rise in output from July to January.
The PBS reported 9.7% growth in 76 commodities produced by provincial bureaus. Previously, the provincial bureaus were monitoring 65 items.
Textiles rose 2.9% in the first seven months of FY22.
The textile sector’s weight in the LSM index fell from over 21% to 18.2%. It remains the index’s largest sector.
During the period under examination, food industry output climbed 3.4%. Production of beverages increased 2.5%.
Production of coke and petroleum products climbed 8.2%, but not chemicals.
The car industry’s output grew 63.5%. The iron and steel sector grew 17.5%, while leather goods manufacture grew 4.5%. The paper and board sector gained 8.2% while wood products grew 172%.
Fertiliser output fell as the government failed to supply gas to urea companies. This refutes the Ministry of Industries’ claim of record urea output this fiscal year.
According to the Ministry of National Food Security and Research, low fertiliser supply and high costs may reduce the productivity of Kharif crops this year.
The PBS said pharmaceutical, rubber, and electronics output fell in the first seven months of the current fiscal year.