LSM posted 10.4pc growth in 9 month of FY 21-22

ISLAMABAD: The Large Scale Manufacturing (LSM) witnessed a whopping 10.4 percent growth during July-March of the outgoing fiscal year 2021-22, against 4.24 percent growth in the corresponding period last year.

The Economic Survey 2021-22 released here on Thursday, highlighted that although Pakistan had survived the Covid-19 crisis, it faced the daunting tasks in the current fiscal year such as controlling stimulus induced fiscal deficit, curtailing widening current account deficit, managing pressure on exchange rate along with achieving a sustainable post-pandemic recovery.

In Pakistan, manufacturing with a share of 12.4 percent in GDP has a dominant presence within the industrial sector.  Pakistan’s national accounts capture the manufacturing sector in three different components, Large Scale Manufacturing (LSM), Small Scale Manufacturing (SSM) and Slaughtering.

The expansion of LSM also appeared to be broad based, with 17 out of 22 sectors of LSM witnessing a positive growth, including furniture, wood products, automobile, footballs, tobacco, iron & steel products, machinery and equipment, and chemical products.

Coke and Petroleum products marginally grew by 2.0 percent in July-March of the fiscal against 12.3 percent in the same period last year.

The high global energy prices depressed the overall growth momentum, however, pickup in economic activities especially automobile and increase in transportation activities the oil sales too showed an increase of 14.9 percent during July-March 2021-22.

The textile sector has the highest weight among all LSM, growing by 3.2 percent during July-March 2021-22 compared to 8.0 percent in the same period last year.

Major growth originated from woolen segment production with the highest surge of 38.9 percent in blankets, 27.9 percent growth in woolen & carpet yarn, and 19.1 percent in woolen & worsted cloth.

Production of yarn and cloth showed marginal growth of 0.7 and 0.3 percent, respectively.

Congruent production units, invariant capacity and elevated cotton prices owing to demand and supply gap disruptions have moderated the growth momentum of the cotton sector.

However, surge in imports of textile machinery, rising demand for concessionary financing from textile firms and high exports of this sector showing a sizable improvement in the textile sector.

The export of garments escalated with 33.9 percent growth in terms of quantity during July-March 2021-22.

Food group having second highest weight in LSM witnessed growth of 11.7 percent, the historic bumper sugarcane crop and better international prices pushed up the production level of sugar in Pakistan.

Production of cooking oil increased by 10.8 percent, while vegetable ghee was down by 2.5 percent, but high palm oil and soybean prices at international markets along with depreciating Rupee led to lower level of production.

Automobile sector marked a vigorous growth of 54.1 percent during July-March 2021-22 against 21.6 percent growth last year. New Auto Policy, to promote new technologies including Electric Vehicles (EVs) and Hybrid, and accommodative monetary policy to promote auto financing paved the way to grew automobiles production.

The iron & steel production jumped by 16.5 percent during the period under review against the contraction of 8.6 percent in the same period last year.

The economic survey said that supply-side disruptions originating from Ukraine-Russia conflict further escalated this disruption. The commodity prices were increasing globally and all these may result in severe challenges in LSM performance as industrial production is mainly dependent on import of capital goods.

Ghulam Abbas
Ghulam Abbas
The writer is a member of the staff at the Islamabad Bureau. He can be reached at [email protected]


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