LSM posts 22.4pc annual growth in March

ISLAMABAD: Large scale manufacturing (LSM) posted 22.4 percent year-on-year growth in March as industrial activities largely resumed compared to the laggard last year, but the big industry extended sequential decline second month in a row, official data showed on Friday.

The Pakistan Bureau of Statistics (PBS) said LSM output increased 22.39 percent for March compared to the corresponding period a year earlier and decreased 7.66 percent if compared to February 2021.

In March, ministry of industries reported 9.43 percent month-on-month drop in production, although provincial bureau of statistics and Oil Companies Advisory Council (OCAC) recorded growth over February.

In February, the decline was 4.15 percent month-on-month. LSM surpassed its pre-COVID level of production in February FY2021, witnessing 4.8 percent growth on year-on-year basis. LSM contracted 10.2 percent last fiscal year.

LSM that makes 80 percent of industrial sector in Pakistan posted 8.99 percent growth in the first nine months of the current fiscal year, according to the PBS.

In July-March, all the three data collection authorities registered increase in production. Ministry of industries, measuring output trend of 36 items, recorded a 6.85 percent increase in production. Provincial bureau of statistics, counting production of 65 products, logged 1.49 percent growth. Oil Companies Advisory Council, logging outputs of 11 oil and petroleum products, measured growth of 0.66 percent.

Large scale manufacturing has long remained under constrained economic environment under the shadow of exchange rate depreciation and restrictive monetary and fiscal policies. Costs of industrial inputs, frequent and repetitive implementations of stabilization and revenue measures and lower domestic demand have been the key factors behind this lackluster performance of LSM.

The government should offer similar incentives to manufacturing sector as have been given to construction sector. Since it covers a large part of the GDP, the said incentives are likely to give a boost to the economy and push the GDP towards achieving

the growth rate of 6 percent and beyond, said Institute of Chartered Accountants of Pakistan (ICAP).

“Government, in collaboration with relevant industries, invests in research and development by joining the resources and develop a pool of scientists who can find solutions to the problems and explore new opportunities or avenues for the industry. The liaison between local institutions and the industry also needs to be fortified,” ICAP said.