Recovery of LSM brightens chances of economic growth

ISLAMABAD: With recovery of the Large Scale Manufacturing (LSM) by touching 5.5 percent growth in the first four months (July-Oct) period, the expectation of turning the economic growth from negative to positive has brightened. However, the LSM index continues to stand lower than pre COVID-19 outbreak.

The LSM output increased by 6.66pc for Oct, 2020 against the same month of the last fiscal year. It increased by 3.95pc if compared to September 2020. The growth in textile sector in October 2020 increased by 2.4 percent, food and beverages 8.6 percent, petroleum products negative 1.67 percent, pharmaceuticals 11.29 percent, non metallic mineral products 24.48 percent, fertilizer 18.5 percent and cement 25 percent.

The official data released by the Pakistan Bureau of Statistics shows that nine major sectors showed positive growth in first four months of the current fiscal year including textile, food, beverages and tobacco, petroleum products, pharmaceuticals, chemicals, non metallic mineral products, fertilizer, paper and board and rubber products.

There are six sectors that showed declining growth in the first four months of the current fiscal compared to the same period of the last financial year, including automobiles, iron and steel products, electronics, leather products, engineering products and wood products.

The government had envisaged GDP growth rate of 2.1 percent for the current fiscal year 2020-21 against contraction of negative 0.4 percent for the last fiscal year. The Ministry of Finance and its Economic Advisory Wing expects more positive growth with improved industrial growth in the current fiscal year.