According to official statistics, Pakistan’s large-scale manufacturing (LSM) industry shrank by 10.26% in the fiscal year 2022-23, with almost all major industries reporting significant decreases.
According to the Pakistan Bureau of Statistics (PBS), the LSM sector, which accounts for around 80% of the country’s industrial output, declined for the 12th straight month in June, by 14.96% year on year, while it grew by 0.98% over May 2023.
According to economists, the recession was caused by a combination of issues such as rupee depreciation, high bank borrowing costs, expensive energy, and local economic and political instability.
In fiscal year 2021-22, Pakistan’s manufacturing industry grew at an 11.7% annual pace, compared to FY21.
The growth was then linked to increased global demand and favorable government policies that boosted the industry and contributed significantly to total GDP development.
Throughout the fiscal year 2022-23, the LSM sector saw a broad-based monthly contraction. The negative trend began in May 2022 and continued through the start of FY23 in July, with a 1.86% decline.
In January 2023, output fell by 7.8%, followed by an 11.59% drop in February. The month of March witnessed a 25% drop, while April saw a 21.07% decrease. In May, the contraction was 14.4%, and it was now minus 14.96% in June.
Only four of the 22 sectors showed modest to moderate positive growth, while the remainder faced significant decreases. Only clothing, football, food, and furniture witnessed a rise in output when compared to the same month the previous year.
A few significant sectors reported higher output in June 2023 as compared to the same month the previous year.
Garments increased by 40.95%, furniture increased by 104.44%, football increased by 10%, and food increased by 6.28%.
Textiles, on the other hand, fell by 19.78%, leather by 3.84%, beverages by 23.54%, tobacco by 44%, wood products by 3.06%, paper and board by 27.2%, coke and petroleum products by 28.8%, chemicals by 7.2% (including an 8.35% drop in chemical products and a 6.38% drop in fertiliser production), and pharmaceuticals by 46.77%.
Rubber product output decreased by 15.5%, nonmetallic mineral product output decreased by 24.3%, iron and steel output decreased by 9.01%, fabricated metal output decreased by 20.91%, computer, electronics, and optical products decreased by 42.7%, electrical equipment decreased by 26.57%, machinery and equipment decreased by 64.4%, automobile output decreased by 71.7%, and other transport equipment decreased by 48.15%.
Besides, sugar production was reduced by 41.3%, cotton yarn production declined by 29.9%, cotton cloth by 17.4%, and cement output contracted by 25.23% over the same month of last year.
The average growth from July to June 2022-23, garments rose by 27.16%, furniture by 35.5%, football by 29%, and leather by 1.29% over the same period of last year.
Interestingly, food output contracted by 6.9%, beverages by 6.43%, tobacco by 28.4%, wood products by 59.8%, paper and board by 8.66%, coke & petroleum products by 13.4%, chemicals by 6.96% (including chemical products minus 3.99% fertilizer by minus 9%), pharmaceuticals with a decline of 28.85%.
Rubber product output fell by 4.97%, nonmetallic mineral product output fell by 12.1%, iron and steel output fell by 5.12%, fabricated metal fell by 16.1%, computer, electronics, and optical products fell by 30.34%, electrical equipment fell by 15.46%, machinery and equipment fell by 45.2%, automobiles fell by 50%, and other transport equipment fell by 40.44%.
Sugar output fell 15.3%, cotton yarn production fell 22.1%, cotton textile production down 12.4%, and cement output fell 13.7% compared to the same period previous year.