Covid-19: Big industry contracts over 24pc in May

ISLAMABAD: Due to the Covid-19 outbreak and exchange rate depreciation, the large-scale manufacturing (LSM) output declined by a record 24.8pc year-on-year in May, according to the data released by the Pakistan Bureau of Statistics (PBS) on Tuesday.

Although the monetary and fiscal policies had kept the big industries reeling throughout the fiscal year 2019-20, the shutdown of industries following the outbreak of coronavirus further added to the LSM sectors’ woes.

On a cumulative basis, the LSM shrank by 10.32pc during the first 11 months (July-May) of FY20, as compared last year. The overall manufacturing in the country was affected by the negative growth in the textile, food, beverages and tobacco, iron and steel, coke and petroleum products. 

According to the economic survey 2019-20, “LSM was not able to withstand a constrained economic environment and the distress continued throughout the fiscal year.”

As per the PBS’ sector-wise data, production of 11 items under the Oil Companies Advisory Committee went down by 20.87pc during 11MFY20, 36 items under the Ministry of Industries and Production dropped by 11.78pc while 65 items reported by the provincial Bureaus of Statistics fell by 4.4pc.

LSM constitutes 80pc of the country’s total manufacturing and accounts for nearly 10.7pc of the national output. In comparison, the small-scale industry makes up for just 1.8pc of GDP and 13.7pc of the secondary sector.

The big industry provides employment opportunities to about 16.1pc of the total labour force while its share in the GDP is around 13-14pc.

According to the data, the auto sector, which has seen a massive decline in sales over the last few quarters, witnessed multiple upward price revisions due to currency depreciation, keeping potential buyers at bay.

On a yearly basis, it registered sales decrease in almost all variants excluding tractors. The production of tractors was up by 10.77pc in May from a year ago, while that of buses and trucks plunged by 100pc, jeeps and cars by 94.67pc and light commercial vehicles by 95.69pc, respectively. The production of motorcycles dipped 69.38pc during the month under review.

Meanwhile, the sugar production declined by 3.69pc YoY in May, while the output of cement fell 35.37pc.

However, the pharmaceutical sector posted growth due to an increase in prices. As a result, the output of syrups was up by 10.07pc, capsules 19.73pc, and tablets 2.35pc. But the production of injection fell 3.8pc in May.

Cooking oil and vegetable ghee witnessed a negative growth of 0.75pc and 3.46pc, respectively, whereas blended tea surged by 23.57pc.

Likewise, electronics’ production posted a negative growth during the month under review, with refrigerators, deep freezers, air-conditioners, electric bulbs, tubes, fans, motors, meters, switch gears, tv sets etc. posting a decline in output. The production of tyres, tubes and related machinery also posted a negative growth during the month under review.

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Ghulam Abbas
Ghulam Abbas
The writer is a member of the staff at the Islamabad Bureau. He can be reached at [email protected]
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