Though above target, manufacturing growth eases to 5.1%

LSM had earlier recorded expansion of 6.5% in six months.

ISLAMABAD: Growth of the large-scale manufacturing (LSM) sector slowed down to 5.16% in the first eight months of the current fiscal year following correction in production data of some of the industries, showed the data released by the Pakistan Bureau of Statistics (PBS) on Friday.

Despite the slowdown, the July-February output growth in LSM industries is still above the yearly target of 4%. The sector contributes slightly over half of the total industrial production while its share in total national output is over one-tenth, making it one of the most important sectors of the economy.

In February alone, LSM industries saw a growth of 1.1% over the same month of previous year. On month-on-month basis, LSM output, however, fell 1.1% over January this year, according to the PBS.

LSM growth in the first half (July-December) stood at 6.5%, a significant contribution to the expansion of gross domestic product (GDP) that averaged 4.1% in the six-month period.

The slowdown in LSM came at a time when the overall GDP growth in the second quarter (October-December) of the fiscal year also decelerated to 3.2%. The government had claimed that in the first quarter the economy had grown at a pace of 5%.

Though there has been some improvement in economic conditions, underlying structural weaknesses are yet to be addressed, according to analysts. They argue that the government is projecting day-to-day administrative decisions as reforms while delaying real reforms in the areas of energy and taxation.

In the eight months, sugar production grew 19% standing at 4.2 million tons, according to the PBS. It had earlier reported about 80% rise in sugar production in seven months.

The Economic Coordination Committee (ECC) of the cabinet also recently questioned the inflated production figures that the Pakistan Sugar Mills Association presented by showing more than the actual surplus in a bid to win permission for export.

According to the data, the production of air conditioners in eight months grew 8.6%. However, on a monthly basis, production fell almost 6%.

The textile sector saw a slight expansion of 1.5% despite uninterrupted gas supplies. Production of food, beverages and tobacco increased 10.6% while fertiliser output rose 24.2%.

Automobile production fell almost 1% in the eight-month period, engineering sector recorded a contraction of 22.2% while pharmaceutical production edged down about half a percentage point.

Published in The Express Tribune, April 19^th, 2014.

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