Industrial and service sectors show slight improvement in first nine months of FY2023-24

Economic Survey 2023-24 highlights improving economic activities, declining inflation, and stabilised external sector

ISLAMABAD: During the first nine months of the outgoing fiscal year, the industrial and services sectors demonstrated improvements, each posting a growth of 1.21 percent.

The Economic Survey 2023-24 expressed confidence in future prospects, highlighting that economic activities were gradually improving, inflation was trending downward, and the external sector had stabilized.

The Economic Survey 2024 noted that the manufacturing and mining sectors contributed significantly to the GDP, accounting for 13.6 percent in FY2023-24, with potential for further growth. These sectors witnessed growth of 2.4 percent and 4.9 percent, respectively, in the nine months of the current fiscal year, compared to declines of 5.3 percent and 3.3 percent last year.

The manufacturing sector is dominated by Large-Scale Manufacturing (LSM), which accounts for 69.3 percent of the sector and contributes 8.2 percent to the overall GDP. Small-scale manufacturing and slaughtering comprise 19.5 percent and 11.3 percent of the manufacturing sector, respectively.

During July-March 2024, LSM recorded a slight decline of 0.1 percent, an improvement from the 7.0 percent decline last year. The textile sector, a major component of LSM, continued to face challenges such as rising input costs, lower export values, competition from China, and higher power tariffs, leading to a reduction in production. The discontinuation of the Export Finance Scheme and high interest rates further exacerbated the situation.

During the nine months, 11 out of 22 LSM sectors witnessed growth, including food, wearing apparel, leather, wood products, coke and petroleum products, chemicals, pharmaceuticals, rubber products, machinery and equipment, furniture, and other manufacturing.

Sectors that recorded negative growth included beverages, tobacco, textiles, paper and board, non-metallic mineral products, iron and steel products, fabricated metal, computers, electronics and optical products, electrical equipment, automobiles, and other transport equipment.

The performance of LSM was primarily affected by unfavorable domestic and global events, supply disruptions, and the effects of floods since the beginning of the current fiscal year. LSM has significantly contributed to exports, accounting for about 71 percent, and has employed 14.9 percent of the labor force.

“This underscores the potential for further growth and development in the sector, instilling confidence in the future of Pakistan’s economy,” the Economic Survey noted.

The services sector also posted positive growth of 1.21 percent, reversing last year’s slight negative growth of 0.01 percent. The services sector has constituted the largest share of GDP, at 58 percent, for several years.

Sub-sectors of services include wholesale and retail trade, which has a 30.8 percent share in the services sector and showed growth of 0.32 percent in nine months, contributing 17.78 percent to the GDP.

The transport and storage sector, with a 10.53 percent share in GDP, witnessed 1.19 percent growth during July-March 2024. Accommodation and food services activities like hotels and restaurants showed growth of 4.10 percent, the education sector by 10.30 percent, human health and social work activities by 6.80 percent, and real estate activities, with a 5.85 percent share in GDP, grew by 3.78 percent compared to the previous year.

However, some sub-sectors witnessed declines, including information and communication by 3.02 percent, finance and insurance activities by 9.64 percent, and public administration and social security by 5.25 percent.

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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