ISLAMABAD: While the agriculture sector showed a dismal picture compared to expectations, and the services sector was nothing to write home about, the one big success story of 2013-14 was the industrial sector.
While the government had estimated that the growth in the industrial sector would be 4.8% in 2013-14, the actual growth is expected to hit 5.8%.
Within this sector, the biggest gainer was the construction sector, which has a multiplier effect on the economy and has significant impact on employment and GDP, grew by a substantial 11.31% in 2013-14, compared to a negative growth of 1.685% in 2012-13.
Large Scale Manufacturing (LSM), which is a subsector of the industrial sector grew by 5.31%, compared to 4.08% in last fiscal year, added.
He pointed out that the electricity generation/distribution and gas distribution subsector of the GDP, which posted a negative growth of 16.33% in the last fiscal year of 2012-13, grew by 3.72% in 2013-14.
Construction sector posts highest growth rate in five years
The construction sector posted exceptional growth of 11.3% in the fiscal year 2013-14 compared to the dismal growth of negative 1.7% in the previous fiscal year.
The impressive rebound of the construction sector surpassed the government’s estimates by a margin of 5.3%. The government had aimed for a 6% growth in the construction sector for the outgoing fiscal year.
Association of Builders and Developers of Pakistan (ABAD) Senior Vice Chairman Salim Kassim Patel said that this rebound in construction is a very positive sign for the economy.
“Double-digit growth in any industry is always positive. I am sure that the construction industry will continue to post strong growth in coming years,” said Patel.
ABAD, which is the umbrella organization of the country’s more than 700 builders, recently urged the government to reduce indirect taxes from industries that a directly related to the construction sector.
According to ABAD estimates, construction industry has a 2% to 2.5% share in the country’s Gross Domestic Product (GDP), which they believe should increase to 5%, which is the regional average.
ABAD representatives stress that in case government and the private sector fail in joining hands, the current backlog of 8 million houses in the country will reach to over 13 million by 2025.
“The construction industry can post double digit growth annually but for that the government has to provide a conducive environment to the private sector,” he said. “If the government increases taxes on cement and steel industry, the growth rate of this industry will fall as it will increase the cost of production.”
Cement and steel industries
The Economic Survey 2013-14 mentioned that the iron and steel industries were the major beneficiaries of steady construction activity in the country. Three new plants namely Aisha Steel, International Steel and Tuwairqi Steel have started commercial operations in recent years.
On the other hand, the cement sector has achieved capacity unitization of 75.23% during the first 10 months of the current fiscal year that is the highest level achieved during the last five years. Moreover, it is expected that it will increased to 80% by the end of this fiscal year in June 2014, the survey said.
“The exuberance in the cement sector is based on some encouraging revival in the construction sector and public sector development programmes,” the survey reported.
Analysts believe that the cement industry of the country stands on strong footing and the rise in construction activities will further support this industry.