A VERY large wheel is grinding to a halt. Large-scale manufacturing has been languishing at growth rates below 2pc throughout this fiscal year.

Latest figures show the LSM growth rate at 1.86pc, whereas in the corresponding period last year the figure was almost 4pc.

Recall that last year was hardly a stellar success for LSM since this is when uncertainty rocked the money markets and the IMF programme had just begun.

Know more: Industry expands 1.86pc in July-Sept

Most of the spurt to growth back then came from the renewed supplies of power due to the circular debt retirement, and diversion of gas towards fertiliser, which accounted for a large share of the uptick in LSM back then.

For the figure to slump to below 2pc today, when we were supposed to be harvesting the fruits of the tough decisions supposedly made in the early months of the current government, should be considered a major failing of the latter.

What is puzzling to note is the healthy march ahead in other indicators. For instance, consumer appliances — fridges, air conditioners, etc — are selling like hot cakes. Indicators of consumer confidence remain elevated despite a small dip in August.

The stock market is touching new heights every day, imports are galloping along, and the trade deficit widened by 50pc in the first quarter of this fiscal year despite a large dip in oil prices. Most of the import growth appears to be coming from consumer goods. In LSM as well, the manufacture of domestic appliances has registered some of the highest growth rates.

All this adds up to a rather uneven picture: incomes and investment are falling while consumption and speculation march on. One part of the economy, relating to trade, consumption and speculation, is on the move while the other side, linked to manufacture, exports and investment, is sinking deeper into the doldrums.

This is an appalling state of affairs, particularly for a government that prides itself on being business-friendly. What good is a growth rate that is devoid of investment and employment? What do we call an economy that eats away tomorrow’s possibilities in return for a quick buck today?

Opening the door to the enjoyment of imported consumer durables is not the only deliverable in economic management.

The government likes to list the areas in which it claims to have delivered: the stock market, the high rates of subscription in government share divestments, Moody’s endorsement, the stable exchange rate and so on.

They ought to take a serious look at manufacturing and tell us how they explain the slump, and what plans they have for its revival.

The government cannot serve speculators and traders alone, then go on to claim an economic revival by pointing to the growth rate. The real test of economic leadership lies in getting the wheels of manufacturing to start turning again.

Published in Dawn, November 26th, 2014