LSM posts record 14.85pc growth in fiscal 2020/21

ISLAMABAD: Large scale manufacturing (LSM) posted record 14.85 percent growth in the fiscal year 2020/21 as industrial activities largely resumed compared to the laggard 2019/20, official data showed on Friday.

In the fiscal year 2019/20 LSM recorded a negative growth 10.17 percent, the Pakistan Bureau of Statistics (PBS) data showed.

Low borrowing cost, subsidized energy tariffs and lax policy of importing raw materials pushed the large industries’ performance up while encouraged more investment in the sector.

LSM accounts for 80 percent of manufacturing sector. During June 2021, LSM posted 18.42 percent growth over the same month a year earlier, extending the uptrend of the past couple of months as cement, steel, textiles, automobile sectors showed robust recovery. Compared to May 2021, LSM rose 4.36 percent.

PBS data showed all the state manufacturing data gathering agencies recorded growth in production in FY21.

Oil Companies Advisory Council, logging outputs of 11 oil and petroleum products, measured growth of 0.96 percent year-over-year in outputs. Ministry of industries, measuring output trend of 36 items, recorded a 11.21 percent growth in production. Provincial bureau of statistics, counting production of 65 products, logged 2.68 percent growth.

Historically, Pakistan’s manufacturing sector grew at an average rate of eight percent from the 60s to 80s, but fell to 3.9 percent during the 90s. The huge downward jump was mainly caused by reduction in investment levels due to the lack of continuity and consistency in policies.

PBS data showed that top performers during the FY21 was automobile sector with a growth of 51 percent followed by non-metallic mineral products with 26.66 percent, pharmaceuticals 19.19 percent, Coke & petroleum products 18 percent, iron & steel 15.58 percent, textiles 15.3 percent, food, beverages & tobacco 11 percent, fertilizers 7.23 percent and baper and board sector shown growth of 4.9 percent over previous fiscal.

Whereas, during the fiscal under review, production of wood products declined by 39.35 percent, leather products 26.45 percent, engineering products 15.37 percent, rubber products 15 percent and electronics production down by 4.43 percent over previous year.

During FY21, Jet fuel oil production increased by 75 percent, petrol 30 percent, diesel 50 percent, light diesel oil 425 percent, furnace oil 63 percent and LPG production increased by 23 percent, whereas kerosene production down by 6 percent.

Sugar production recorded growth of 144 percent, cotton yar and cotton cloth grew by 10 percent each. Cement production increased by 32.4 percent, tractors 25 percent, trucks 178 percent, jeeps and cars 265 percent, LCVs 68 percent, motorcycles up by 6 percent however, buses production reduced by 14 percent and motor tyres also down 26 percent.

A negative growth in LSM in previous years contracted the GDP and analysts mostly blamed tough IMF’s conditions for slowdown in economy.

A tightening in fiscal and monetary policies to achieve fiscal sustainability and contain balance of payment suffocated the growth, they said. Besides, the rupee also devalued to cut the imports and boost exports. Apart for this, the public spending also substantially curtailed to manage the fiscal deficit.