Inflation, dollar scarcity, and import curbs reduced Pakistan’s large-scale manufacturing (LSM) output by 5.5% in November 2022.
The Pakistan Bureau of Statistics (PBS) reported that textiles, food, garments, chemicals, automobiles, cement, and fertilizers were affected.
October 2022 output increased by 3.55%. However, the average output fell by 3.58% from July to November 2022.
Bank financing is expensive due to the government’s inflation-fighting policies. The industrial sector has also suffered from the dollar shortage and the government’s import restrictions. Since last month, some factories have closed due to inventory shortages caused by a lack of foreign exchange to import raw materials.
Industrial output accounts for nearly 20% of Pakistan’s GDP so a decline could hurt GDP. The federal government has also suggested 3% growth instead of 5%.
In its latest “Global Economic Prospects Report,” the World Bank predicted 2% GDP growth for Pakistan in FY23.
The Asian Development Bank (ADB) also said that quantitative tightening and cuts in government spending to control fiscal and external imbalances would lead to a 3.5% growth in GDP in FY23.
Demand, capacity, and import price constraints from the rupee’s depreciation would reduce industry output.
The federal budget for the fiscal year 2022-2023 set a goal of 5% economic growth.
LSM output fell 16.5% in July 2022 and 1.4% in July 2021 for the first time in nearly two years.
PBS’s November 2022 LSM monthly bulletin showed most sectors with negative growth. Only five of the 25 LSM industrial categories—garments, leather products, furniture, football, beverages, Coke, and petroleum products—grew.
However, sectors with high LSM Quantum Index Number output decreased. Textiles, food, iron and steel, chemicals, automobiles, pharmaceuticals, cement, and non-metallic mineral products
Textiles output was down 22%, pharmaceuticals 8.34%, non-metallic minerals 13%, food 13.6%, iron and steel 8.7%, chemicals 7.06% (of which chemical products output was down 6.15% and fertilizer 7.74%), and cement 12.1% compared to November 2021.
Over November 2021, machinery and equipment output dropped 56%, automobiles 18.97%, fabricated metals 18.4%, rubber products 9.3%, computer, electronics, and optical products 29.8%, wood products 80.5%, tobacco 20.25%, paper and board 1.7%, and other transport equipment 41%.
Garments increased 49.7%, leather 9.84%, furniture 36.4%, football 55.6%, beverages 9.97%, and coke and petroleum products 5.26%.
Only wearing apparel (garments) increased by 51.48%, leather by 9.84%, furniture by 99.3%, and footballs by 59.7% from July to November of FY23.
Food output fell by 7.78%, beverages by 5.4%, tobacco by 22.3%, textiles by 11.45%, wood products by 63.6%, paper and board by 2.8%, coke and petroleum products by 13.6%, pharmaceuticals by 23.2%, rubber products by 9%, non-metallic mineral products by 12.35%, computer, electronics, and optical products by 17.17%, machinery and equipment by 41.2%, and automobiles by 28.7%. Fabricated metal output fell 18.23% year on year, iron and steel output fell 0.87%, and other transport equipment fell 42%.
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