The Pakistan Bureau of Statistics released data on Monday showing that large-scale manufacturing (LSM) shrank by 11.6% in February compared to the same month last year, leading to widespread layoffs, especially in the textile industries that depend heavily on exports.
The slowdown in industrial output is mainly attributed to the textile and clothing industries, which have seen double-digit declines in exports. This trend is expected to continue in the coming months.
The contraction in big industry production marks the sixth consecutive month of decline in the current fiscal year, signaling further economic growth decline. The fourth quarter is expected to be especially difficult due to the discontinuation of subsidized energy to industries, along with the highest-ever cost of industrial inputs.
The International Monetary Fund, World Bank, and Asian Development Bank have all revised downward their economic growth projections for Pakistan’s FY23, with estimates ranging from 0.4% to 0.6%.
In the months of July through February, LSM posted a negative growth of 5.56% on a year-on-year basis, compared to the 11.7% year-on-year growth in the previous fiscal year.
Economists have raised concerns about the slowdown, citing record energy and raw material prices and restrictions on imports. Export-based manufacturers have already indicated a decline in their production due to higher energy costs and other inputs, mainly due to the discontinuation of subsidised electricity.
In February, the production of 18 sectors shrank, while only two posted a marginal rise. The textile sector saw a significant decline of 19.67% in production, with major negative growth originating from yarn and cloth. Garment production also entered negative growth for the first time in February, with a decline of 2.99%.
The food group saw declines in wheat, rice, and tea blended production while cooking oil and vegetable ghee production increased. Petroleum products saw a negative growth of 6.35%, and the auto sector saw a slump of 64.08%.
Iron and steel production decreased by 9.19% due to a decline in billets/ingots, while non-metallic mineral products decreased by 1.33%. Chemical products, on the other hand, posted a positive growth of 2.96%. The production of pharmaceutical products, rubber products, and fertilizers also saw significant declines in February.
