Heavy industries: LSM picks up pace with 4.7% growth
Eclipses 2.8% expansion of last year as govt moves to tackle power deficit
Eclipses 2.8% expansion of last year as govt moves to tackle power deficit. PHOTO: REUTERS
KARACHI:
Large-scale manufacturing (LSM) - which constitutes 80% of Pakistan’s manufacturing sector - picked up momentum and posted a 4.7% growth in the first nine months (Jul-Mar) of outgoing fiscal year 2015-16 compared to 2.81% in the same period last year, according to the Pakistan Economic Survey 2015-16.
Outlining the major impediments that restricted LSM growth, the survey said the sector had suffered due to scarcity of inputs in the past and the major factor that hampered its growth was power deficit.
However, it said, the government made focused efforts to resolve the issue and developed a road map to tackle the crisis on a fast track and sustainable basis.
Textile
The textile industry, which has the highest 21% share in LSM, continued to show a dismal performance as it recorded a minuscule growth of 0.62% in the first nine months (Jul-Mar) of fiscal year 2015-16 compared to 0.97% in the same period of previous year.
Apart from electricity shortages and security concerns domestically, the textile industry has been continuously taking a hit for over one year now from the economic slowdown in export markets, especially in Europe.
Exports of this vital industry dropped 8.6% to $10.4 billion in the first 10 months (Jul-Apr) of the current fiscal year compared to $11.3 billion in the corresponding period of previous year, according to latest data of the Pakistan Bureau of Statistics. The industry has recently started receiving imported liquefied natural gas in Punjab to meet its energy needs, which is expected to ease some domestic challenges, but an industry official says there is little they can do about the global problems.
Automobile
The automobile industry with a share of 4.6% in LSM recorded the highest growth of 23.4% in Jul-Mar 2015-16 compared to 17% last year.
Car sales continued to rise with the support of stable macroeconomic growth, improvement in security situation and 42-year low interest rates that spurred auto financing in the country.
Fertiliser
The fertiliser industry that has a 4.4% share in LSM and provides a major input for crop production rebounded strongly with a growth of 15.9% in the first nine months of 2015-16 compared to 0.95% last year.
The main factor behind the growth in the industry was better supply of gas, the main ingredient in fertiliser manufacturing.
The LSM sector also got some boost from a continued improvement in the supply of electricity and gas coupled with expansion in bank credit to the private sector. The expansion in credit to the private sector remained high due to lower cost of credit and better market conditions, the survey said.
The chemical sector grew 10% in the period under review compared to 6.7% last year. “The exceptionally well performance mainly came due to construction activities and the start of commercial operation by a caustic soda producing unit,” the survey said.
Rubber products also showed a strong performance as their production grew 11.7% against 1.9% last year. In addition to this, output of leather products jumped 12.2% compared to 9.1% last year, pharmaceuticals grew 7.2% against 6.8% last year and non-metallic mineral products rose 10.2% compared to 2.7% last year.
The biggest losers were iron and steel products, which have a share of 5.4% in LSM, whose output fell 7.5% against an increase of 36% in the period under review. However, the survey did not comment why the sector contracted that much.
Published in The Express Tribune, June 3rd, 2016.
Large-scale manufacturing (LSM) - which constitutes 80% of Pakistan’s manufacturing sector - picked up momentum and posted a 4.7% growth in the first nine months (Jul-Mar) of outgoing fiscal year 2015-16 compared to 2.81% in the same period last year, according to the Pakistan Economic Survey 2015-16.
Outlining the major impediments that restricted LSM growth, the survey said the sector had suffered due to scarcity of inputs in the past and the major factor that hampered its growth was power deficit.
However, it said, the government made focused efforts to resolve the issue and developed a road map to tackle the crisis on a fast track and sustainable basis.
Textile
The textile industry, which has the highest 21% share in LSM, continued to show a dismal performance as it recorded a minuscule growth of 0.62% in the first nine months (Jul-Mar) of fiscal year 2015-16 compared to 0.97% in the same period of previous year.
Apart from electricity shortages and security concerns domestically, the textile industry has been continuously taking a hit for over one year now from the economic slowdown in export markets, especially in Europe.
Exports of this vital industry dropped 8.6% to $10.4 billion in the first 10 months (Jul-Apr) of the current fiscal year compared to $11.3 billion in the corresponding period of previous year, according to latest data of the Pakistan Bureau of Statistics. The industry has recently started receiving imported liquefied natural gas in Punjab to meet its energy needs, which is expected to ease some domestic challenges, but an industry official says there is little they can do about the global problems.
Automobile
The automobile industry with a share of 4.6% in LSM recorded the highest growth of 23.4% in Jul-Mar 2015-16 compared to 17% last year.
Car sales continued to rise with the support of stable macroeconomic growth, improvement in security situation and 42-year low interest rates that spurred auto financing in the country.
Fertiliser
The fertiliser industry that has a 4.4% share in LSM and provides a major input for crop production rebounded strongly with a growth of 15.9% in the first nine months of 2015-16 compared to 0.95% last year.
The main factor behind the growth in the industry was better supply of gas, the main ingredient in fertiliser manufacturing.
The LSM sector also got some boost from a continued improvement in the supply of electricity and gas coupled with expansion in bank credit to the private sector. The expansion in credit to the private sector remained high due to lower cost of credit and better market conditions, the survey said.
The chemical sector grew 10% in the period under review compared to 6.7% last year. “The exceptionally well performance mainly came due to construction activities and the start of commercial operation by a caustic soda producing unit,” the survey said.
Rubber products also showed a strong performance as their production grew 11.7% against 1.9% last year. In addition to this, output of leather products jumped 12.2% compared to 9.1% last year, pharmaceuticals grew 7.2% against 6.8% last year and non-metallic mineral products rose 10.2% compared to 2.7% last year.
The biggest losers were iron and steel products, which have a share of 5.4% in LSM, whose output fell 7.5% against an increase of 36% in the period under review. However, the survey did not comment why the sector contracted that much.
Published in The Express Tribune, June 3rd, 2016.