ISLAMABAD: Exchange rate depreciation and contractionary monetary and fiscal policies plunged the large-scale manufacturing (LSM) by 5.4 per cent in the outgoing fiscal year, figures released by the Pakistan Economic Survey 2019-20 showed on Thursday.

The survey said that except for fertilisers, almost all other sectors witnessed decline in the July–March period.

Negative growth in the textile and food, beverages and tobacco, iron and steel products, coke and petroleum products dampened the overall manufacturing in the country.

The economic survey said that LSM was not able to withstand constrained economic environment and the distress continued during the current fiscal year.

This big industry provides employment opportunities to about 16.1pc of the total labour force while its share in the GDP is around 13-14pc.

While the fiscal year 2019-20 started with a positive note as the LSM posted 2.11pc growth in July 2019, the growth dampened to -2.42pc in August, whereas the pace picked up and growth was recorded at 2.76pc in September 2019, followed by another sharp increase of 5.4pc in October 2019.

Whereas November 2019 again witnessed a negative growth of 3.81pc, but there was a steep increase in LSM growth of 15.27pc in December 2019.

The increase is due to sugar production, which rose sharply owing to favorable weather conditions and timely start of crushing season as compared to last year, reaching 7.09pc in January.

While February witnessed a moderate growth of 0.16pc, the LSM nosedived by 21.9pc in March due to closure of business activities in the wake of Covid-19 outbreak.

The major sectors contributing in the LSM are textile with weight of 20.915pc, food, beverages and tobacco at 12.37pc, coke and petroleum products at 5.5pc, iron and steel products 5.4pc, non-metallic mineral products 5.364pc, automobiles 4.613pc, pharmaceuticals 3.6pc and chemicals 1.7pc.

The economic survey said the textile production declined by 2.57pc during Jul-Mar against -0.17pc in the same period last year.

The food, beverages and tobacco sector decreased by 2.33pc during the current fiscal year, coke and petroleum industry registered a double-digit contraction of 17.46pc.

The pace of contraction of iron and steel production, during nine months of current fiscal year, was negative 7.96pc and the decline was mainly in wake of subdued construction activities due to high financing cost.

However, the non-metallic mineral products performed well to close at 1.82pc, but the automobile sector witnessed a steep decline of 36.5pc, pharmaceuticals registered decline by 5.38pc and the chemicals declined by 2.3pc during Jul-Mar.

Out of 15 sectors in the LSM basket, only five were in the positive during 2019-20.

Published in Dawn, June 12th, 2020