Economic distress: Pakistan’s large-scale manufacturing down 25% YoY in March

The output of Large Scale Manufacturing Industries (LSMI) witnessed a decline of 24.99% year-on-year in March 2023, the largest drop since May 2020 (during the pandemic), data released by the Pakistan Bureau of Statistics (PBS) showed on Monday.

According to the provisional Quantum Index numbers (QIM), the LSMI output declined by 9.09% in March 2023 when compared with February 2023.

Jul-Feb LSMI output declines 5.56pc YoY

During the first nine months (July-March) of 2022-23, the LSMI output decreased by 8.11% when compared with the same period of last year, says PBS.

The LSMI Quantum Index Number (QIM) was estimated for July-March, 2022-23 at 116.57, while it was estimated for March 2023 at 115.31.

The provisional quantum indices of Large Scale Manufacturing Industries (LSMI) for March 2023 with base year 2015-16 have been developed on the basis of latest data supplied by the source agencies, i.e., OCAC, Ministry of Industries and Production, Ministry of Commerce and Provincial Bureau of Statistics (BoS).

The LSM data released by the PBS with base year 2015-16 showed that the main contributors towards overall decline of -8.11% are, food (-1.62), tobacco (-0.57), textile (-3.16) garments (2.94), petroleum products (-0.68), cement (-0.85), pharmaceuticals (-1.30), and automobiles (-1.85).

Meanwhile, production in July-March 2022-23 as compared to July-March 2021-22 has increased in wearing apparel, furniture and other manufacturing (football) while it decreased in food, tobacco, textile, coke & petroleum products, pharmaceuticals, chemicals, non-metallic mineral products, machinery and equipment, automobiles and other transport equipment.

The poor performance in the industrial sector reflects the overall economic slowdown across various sectors in the ongoing fiscal year. The inability of the industries to secure Letters of Credit in the wake of government’s recent measures due to dollar shortage has dented production.

The government remains engaged in trying to convince the International Monetary Fund (IMF) to revive the stalled Extended Fund Facility (EFF) programme, which if approved by its board would release a funding tranche of over $1 billion.

However, the programme has been stalled at the ninth review since November last year.

The IMF has already revised downward the GDP growth rate projection for Pakistan from 2% to 0.5% for the current fiscal year, ie, 2023.

Provisional figures for this fiscal year’s performance are scheduled to be released on June 8, a day before the federal budget announcement.