Pakistan’s big industry output drops 25% due to import restrictions

Large-scale manufacturing (LSM) in Pakistan experienced a significant decline of 25% in March compared to the same period last year, marking the highest monthly contraction since the onset of the COVID-19 pandemic.

The latest data released by the Pakistan Bureau of Statistics on Monday revealed that the LSM industry production had contracted for the seventh consecutive month during the current fiscal year, primarily impacting the export-based textile and clothing sectors.

Declining LSM in the previous months

The decline in LSM was evident in the previous months as well.

  • February 2023: LSM growth dipped by 11.6% on a year-on-year basis
  • January 2023: LSM growth decreased by 7.9%
  • December 2022: LSM declined by 3.51%
  • November 2022: Negative growth of 5.49%
  • October 2022: Negative growth of 7.7%
  • September 2022: Negative growth of 2.27%
  • August 2022: Slight rise of 0.30%
  • July 2022: LSM contracted by 1.67%

July to March: LSM registered a negative growth rate of 8.11% year-on-year.
The decline in LSM not only hampers the production capacity of major industries but also suggests a potential slowdown in overall economic growth in the coming months. Consequently, a considerable number of workers have lost their jobs as a result of the struggling big industries.

Sectors with the declining LSM

In the month of March, 19 sectors witnessed a decline, with only one sector experiencing marginal growth. Statistics of various sectors are given below.

Textile sector: Production shrunk by 30.74% compared to the previous year.

Yarn production: Decreased by 30.10%

Cloth production: Decreased by 17.73%

Other textile products: Reported nominal growth

Garment sector:

  • Showed a positive growth rate of 11.03% in March
  • Positive performance in the first seven months, except for February.

Food group:

  • Wheat production: Declined by 11.17%
  • Rice production: Declined by 1.71%
  • Cooking oil production: Increased by 13.69%
  • Vegetable ghee production: Rose by 23.99%

Petroleum products sector:

  • Experienced a negative growth rate of 16.06%
  • Decline in petrol and high-speed diesel production
  • Other petroleum products, except jet fuel, kerosene, jute, and batching oil, recorded a slowdown.

Auto sector:

  • Saw a significant slump of 24.68% in March, except for diesel engines
  • Iron and steel production: Dipped by 5.07% in March
  • Decline of 13.21% in billets/ingots
  • Non-metallic mineral products: Declined by 22.19%

Chemical products:

Experienced negative growth of 8.79%

Pharmaceutical products: Production declined by 28.10%

Rubber products: Declined by 12.80%

Fertilizers: Decreased by 22.08% compared to the previous year.

Experts predict that the fourth quarter of the 2022-23 fiscal year, spanning from March to June, maybe even more tumultuous due to the discontinuation of subsidized energy to industries. Additionally, the depreciating value of the rupee and soaring energy costs have resulted in the highest-ever prices of raw materials and other necessary inputs.

Several international financial institutions have revised their economic growth projections for Pakistan downwards. The International Monetary Fund, World Bank, and Asian Development Bank forecast economic growth rates of 0.5%, 0.4% and 0.6% for the fiscal year 2022-23, respectively.

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