ISLAMABAD: The large scale manufacturing (LSM) sector marginally grew 1.2 per cent last year because of the negative impact of severe energy shortage and escalating cost of doing business. This growth is below the target but still higher than initial estimates.
The provisional estimates of Federal Bureau of Statistics released on Tuesday showed that the LSM grew 1.14 per cent during the last financial year, ended on June 30. The figure is higher than the estimates of the Finance Ministry that had projected 0.98 per cent LSM growth in Economic Survey of Pakistan.
The provisional data is computed on the basis of output of 100 industries monitored by the Oil Companies Advisory Committee, Ministry of Industries and Provisional Bureau of Statistics. Out of those, 48 industries registered negative growth and 52 industries showed positive growth.
According to the FBS, the data compiled by the four provincial bureaus of statistics showed that 24 industries saw a massive dip in production. This resulted into slightly over two per cent negative growth during the last financial year The Oil Companies Advisory Committee data showed that the oil and gas sectors production also dipped 2.3 per cent last year. The Ministry of Industries and Production data depicted growth of 3.6 per cent that pushed the overall LSM growth to positive zone last year.
Due to higher than the estimated output the overall economic growth rate for the last fiscal year will slightly be upward revised. Against the earlier estimates of 2.4 per cent the national output rate may now remain around 2.5 per cent, said an official of the Economic Advisory wing of the Finance Ministry. However, final economic growth number will be firmed by the National Accounts Committee that usually meets to review growth numbers in May.
According to the official documents, slower industrial growth is because of the fact that the LSM was hit by power outages and lower domestic demand.
The latest statistics also forecast a gloomy picture for the new financial year. According to the FBS, in June the large scale manufacturing quantum decelerated almost three per cent over the corresponding month of the last year. It also gives an indication that the energy shortage will continue to hurt large scale industries in the new financial year. For this year the government has projected a nominal two per cent growth in the large industries.
The Economic Advisory wing official said that an almost one-fifth decline in Pakistan Steel Mills production in June also hurt growth sentiments.
On monthly basis sugar production dropped 21.4 per cent, jute goods decelerated almost nine per cent and billets and ingots almost one-fourth.
Published in The Express Tribune, August 17th, 2011.