Large scale manufacturing (LSM) fell 7.75 percent year on year in October, with the textile, machinery, equipment, and automobile sectors contracting, according to data released on Thursday by the Pakistan Bureau of Statistics (PBS).
According to official data, the LSM rebounded in September, increasing by 0.1 percent year on year. That was a significant improvement from July, when the LSM shrank 1.4 percent year on year.
Economists, on the other hand, have expressed concern about an economic slowdown caused by record energy and raw material prices.
Commenting on the latest figures, former finance ministry adviser Dr Khaqan Najeeb said, “Facing a balance of payments challenge, the authorities have taken a number of measures to slow down the economy. These include monetary policy tightening as well as administrative measures to limit imports. These measures, combined with floods, energy shortages, and a slowing global economy, have resulted in a contraction of LSM output.”
The economic slowdown, while necessary for economic stabilisation, has been quite pronounced, according to Najeeb.
“It is critical to alleviate the severe dollar liquidity crunch by increasing inflows and maintaining a reasonable exchange rate so that manufacturing is not disincentivised,” he added.
Automobiles (down 30.56%), textiles (down 24.62%), machinery and equipment (38.01%), wood products (81.75%), computer, electronics, and optical products (25.66%), and pharmaceuticals were the main contributors to the YoY decline (18.56pc).
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Furniture, on the other hand, increased by 105.41 percent, followed by football (65.46 percent), and wearing apparel (65.46 percent) (34.14pc).
According to PBS data, LSM fell 3.62 percent in October compared to the previous month.
Furthermore, LSM fell 2.89 percent between July and October compared to the first four months of the previous fiscal year.
“When compared to July-October 2021-22, production of wearing apparel and furniture increased while production of food, tobacco, textile, coke & petroleum products, pharmaceuticals, rubber products, non-metallic mineral products, fabricated metal, electrical equipment, machinery and equipment, automobiles and other transport equipment decreased,” according to the PBS.
The slowdown began in June, when manufacturing activity increased by only 0.2 percent over the previous month.
Large scale manufacturing increased 11.7 percent year on year in the previous fiscal year.