ISLAMABAD: During the nine months of the outgoing fiscal year, the industrial and services sectors improved, with each posting a growth of 1.21 per cent, according to the Pakistan Economic Survey 2023-24. The survey expressed confidence over the future prospects of the sectors, highlighting that economic activities are gradually improving, inflation is trending downward, and the external sector is stabilising.
The survey said that the manufacturing and mining sectors contributed 13.6pc to GDP in the outgoing fiscal year 2023-24 and have the potential for further growth. These sectors witnessed a growth of 2.4pc and 4.9pc, respectively, in nine months of the current fiscal year compared to a decline of 5.3pc and 3.3pc last year.
The manufacturing sector is dominated by large-scale manufacturing (LSM), which accounts for 69.3pc and contributes to 8.2pc of the overall GDP. Small-scale manufacturing and slaughtering comprise 19.5pc and 11.3pc of the sector, respectively.
LSM recorded a slight decline of 0.1pc during July-March 2024, but this was an improvement from the 7pc decline last year. A major component of LSM is the textile sector, which continued to face challenges such as rising input costs, lower export values, competition from China, and higher power tariffs, leading to a reduction in production. The discontinuation of the Export Finance Scheme and high interest rates further exacerbated the situation.
During the nine months, 11 out of 22 LSM sectors witnessed growth, including food, wearing apparel, leather, wood products, coke & petroleum products, chemicals, pharmaceuticals, rubber products, machinery & equipment, furniture, and other manufacturing.
The sectors that recorded negative growth are beverages, tobacco, textile, paper & board, non-metallic mineral products, iron & steel products, fabricated metal, computers, electronics & optical products, electrical equipment, automobiles, and other transport equipment.
It has been highlighted that the performance of LSM has been primarily affected by unfavourable domestic and global events, supply disruptions, and floods since the beginning of the current fiscal year.
The LSM has contributed significantly to exports, accounting for about 71pc and has employing 14.9pc of the labour force. “This underscores the potential for further growth and development in the sector, instilling confidence in the future of Pakistan’s economy,” the Economic Survey has added.
The services sector, too, has posted a positive growth trajectory of 1.21pc compared to -0.01pc last year. For the last several years, at 58pc, the services sector has constituted the largest share of GDP. Subsectors of wholesale & retail trade, which have a share of 30.8pc, showed growth of 0.32pc with a share of 17.78pc in GDP.
Published in Dawn, June 12th, 2024
