Large-scale manufacturing (LSM) declined by 7.75 per cent year-on-year in October, with the textile, machinery and equipment, and automobiles sectors shrinking, data shared by the Pakistan Bureau of Statistics (PBS) showed on Thursday.
The LSM had swung to growth in September, posting an annual increase of 0.1pc compared to August, official data showed. That was quite an improvement from July when the LSM shrank 1.4pc year-on-year.
However, economists had raised concerns about an economic slowdown caused by record energy and raw material prices.
Commenting on the latest figures, former finance ministry adviser Dr Khaqan Najeeb said, “Facing a balance of payments challenge, the authorities have taken a number of measures to slow down the economy. These include tightening of monetary policy as well as administrative measures to curtail imports. These measures coupled with challenges of floods, energy shortfalls and a slowing global economy have resulted in contraction of the LSM output.”
The economic slowdown, however necessary to stabilise the economy, has been quite pronounced, Najeeb said.
“It is important to ease the severe dollar liquidity crunch by increasing inflows and maintain a realistic exchange rate so that manufacturing is not disincentivised,” he added.
The main contributors to the YoY decline were automobiles (down 30.56pc); textile (24.62pc); machinery and equipment (38.01pc); wood products (81.75pc); computer, electronics and optical products (25.66pc); and pharmaceuticals (18.56pc).
On the other hand, the furniture sector grew 105.41pc, followed by football (65.46pc) and wearing apparel (34.14pc).
PBS data showed that LSM dipped by 3.62pc in October over the preceding month.
Moreover, in the July-October period, LSM shrank 2.89pc compared to the first four months of the previous fiscal year.
“The production in July-October 2022-23 as compared to July-October 2021-22 has increased in wearing apparel and furniture while it decreased in food, tobacco, textile, coke & petroleum products, pharmaceuticals, rubber products, non-metallic mineral products, fabricated metal, electrical equipment, machinery and equipment, automobiles and other transport equipment,” the PBS said.
The slowdown had started in June when manufacturing activity grew only 0.2pc compared to the previous month.
In the previous fiscal year, large-scale manufacturing grew 11.7pc year-on-year.