Large scale manufacturing contracts 10.17pc in FY20

ISLAMABAD: Output of the Large-Scale Manufacturing (LSM) sector reduced by 10.17 per cent during fiscal year 2019-20 (FY20) compared to FY19, the Pakistan Bureau of Statistics (PBS) reported on Wednesday.

The drop in the LSM output was due to slow economic activity in the first half and negative economic impact of Covid-19 in the last quarter of FY20.

According to the data released by PBS, LSM output reduced 24.8 per cent Year-on-Year (YoY) in May 2020. Since May, the decline in LSM production has decelerated owing to the resumption of production activities in textile and other sectors.

LSM production increased by 16.81 per cent in June 2020 compared to May 2020. However, LSM output in June 2020 was still 7.74 per cent lower on an YoY basis.

Market experts believe that lowering of interest rates by the central bank and reduction in duties on raw materials will further spur economic activities in the country.

According to economists, higher interest rates, exchange rate depreciation, contractionary monetary and fiscal policies decreased LSM output in FY20. The contraction in textile and food, beverages and tobacco, iron and steel, coke and petroleum products dampened the overall manufacturing in the country.

Sector-wise, production of 11 items under the Oil Companies Advisory Committee decreased by 20.10 per cent and production of 36 items under the Ministry of Industries and Production decreased by 11.20 per cent in FY20.

LSM constitutes 80 per cent of the Pakistan’s total manufacturing and accounts for nearly 10.7 per cent of the national output.

As per data released by PBS, the auto sector was a major laggard with massive declines in sales in FY20 on account of multiple upward price revisions due to currency depreciation.

On an yearly basis production of tractors decreased by 34.66 per cent while production of trucks declined by 51.2 per cent. Similarly, the production of buses declined by 41.73 per cent, while that of jeeps and cars dropped by 54.84 per cent. Moreover, production of motorcycles witnessed a decrease of 23.51 per cent.

The production of tractors and motorcycles however witnessed an improvement during June 2020 owing to improvement in sales.

According to data released by PBS output of all 11 petroleum products was lower by 20.1 per cent in FY20 compared to FY19. The production of two major oil products, petrol and high-speed diesel, decreased by 13 per cent and 20.04 per cent respectively.

Meanwhile, the output of sugar declined by 7.2 per cent while that of cement fell 2.01 per cent on an YoY basis in FY20.

Moreover, the production of cooking oil and vegetable ghee increased by 9.05 per cent and 3.55 per cent, respectively whereas production of blended tea reduced by 8.31 per cent on an YoY basis in FY20.

Similarly, the production of electronic goods contracted, due to a decline in sale of refrigerators, deep freezers, air-conditioners, electric–bulbs, tubes, fans, motors, meters, switch gears and television sets.

 

 

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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