Industrial sector misses target by a mile, grows 3.62%

Services sector fares better, falls just short of target.

ISLAMABAD:

The industrial sector missed its target by a mile as it recorded growth of 3.62% in the current financial year against the target of 6.8%, which has been attributed to gas shortages.

According to the Economic Survey of Pakistan 2014-15, the growth was also lower than the previous year’s 4.45%. The government, however, said it had initiated comprehensive policy measures for the revival of industrial sector on a fast track.

The sector contributes 20.30% to the country’s gross domestic product (GDP) and has four sub-sectors – mining and quarrying, manufacturing, electricity generation and distribution and gas distribution, and construction.

The growth of manufacturing sector – which accounts for 13.3% of GDP and 14.2% of the total employed labour force – dropped to 3.17% compared to 4.46% in fiscal year 2013-14. The target was 6.9%.

A part of this sub-sector, the large-scale manufacturing sector (LSM) also missed the target. The LSM industry registered a growth of 2.5% during July-March 2014-15 against the target of 7%. The construction sector showed a growth of 7% against 7.2% last year, almost achieving its target of 7.5%

Its contribution to the industrial sector is 12% and to the country’s GDP is 2.4%. It provides employment opportunities to 7.33% of the labour force and is considered one of the potential components of industries. Mining and quarrying recorded a growth of 3.8% against 1.6% last year. The target was largely missed, which was 6.5%.

Electricity generation and distribution and gas distribution, one of the most important components which directly and indirectly contributes to the growth of all sectors of the economy, fell massively short of the target.

Its growth stood at 1.94% as opposed to the target of 5.5% and the crippling energy crisis was reflected in growth rates of almost all the components.

Services sector

While the picture remained not very encouraging for most sectors, the services sector nearly reached its growth target of 5.2% and hit 4.95%.

Major support came from the finance and insurance industries, which posted a growth of 6.2% against the target of 5.8% and last year’s growth of 4.2%. The performance of the banking sector, which dominates the financial sector, was better than most.

All components of services contributed positively to the growth rate as wholesale and retail trade grew 3.38%, transport, storage and communications rose 4.21%, housing services increased 4%, general government services jumped 9.44% and other private services grew 5.94%.

Published in The Express Tribune, June 5^th,  2015.

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