Large-ccale manufacturing (LSM) sector growth posted a broad-based decline of 8 percent during nine months of the current fiscal year 2008-09 as compared to 6 percent rise during the same period of last fiscal year. Economists said that greater energy crisis during last two years, rise in input cost and lower and slow domestic and external demand were responsible for the decline in production of LSM sector.
They said that global economic recession had also taken its toll on export-driven industries including textile with over 60 percent share in the country's exports, which also declined by 8 percent in current fiscal year. The export-oriented units are also difficulties in marketing due to the country's poor law and order situation, security problems, and the country's image, which affected Pakistan's exporters' and producers' ability to meet the delivery deadlines, they said.
"Although we are assuring our importers of on-time delivery, yet despite all guarantees they are hesitant in placing orders and prefer our neighbour countries," a leading exporter said. He said that on marketing side the need is that the government should launch a campaign in collaboration of export bodies to boost the country's exports. "Otherwise we are expecting further decline in the growth of LSM sector and the country's exports".
Federal Bureau of Statistics (FBS) data on Monday showed a negative trend of some 7.67 percent in the Quantum Index Number of LSM industries during July-March period of 2008-09. Official provisional statistics of Quantum Index Numbers of Large Scale Manufacturing Industries (QIM) of FBS depict that the production of major industries, including oil, sugar auto, textile etc, was on decline during the period.
QIM shows the industrial productivity of 100 items received from different sources ie Oil Companies Advisory Committee (OCAC), Ministry of Industries & Production and Provincial Bureaus of Statistics. OCAC supplied data of 11 items; Ministry of Industries & Production supplied data of 35 items; and Provincial Bureaus of Statistics (BOS) provided data for 54 items.
Major share in present negative growth was contributed by OCAC, as its index declined by 9.19 percent to 158.76 points, Ministry of Industries index dipped by 7.69 percent to 195.46 points; and the provincial BOS index declined by 7.38 percent to 200.13 points.
During March 2009, the LSM growth posted a big decline of 20 percent agains 8 percent of February 2009. Muzammil Aslam, an economist at JS global said: "We believe lower exports and slow domestic demand led to the steep decline". He said that frequent power breakdowns, higher tariff and interest rate, and bad law and order situation also affected the production.
"Given the dismal trade numbers and decent inflation statistics, we believe substantial policy action would be required from policy makers to boost the confidence of the industrial sector," Aslam said. He said that interruptions in energy supplies and upward adjustment in the prices of electricity, gas and diesel and rupee depreciation with greater volatility also increased the cost of imported inputs.
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