A look at manufacturing and performance of Large-Scale Manufacturing

Engineering Post Report

Manufacturing in Pakistan with a share of 12.4 percent in the Gross Domestic Product (GDP) has a dominant presence  within the industrial sector. Pakistan’s  national accounts capture  manufacturing sector  in three different components; Large ScaleManufacturing (LSM), Small Scale Manufacturing (SSM) and Slaughtering. Establishments  having 10 or more employees  are covered under LSM. Quantum Index of Manufacturing (QIM) is a measure of LSM  performance with 78.4 weight in overall LSM in overall LSM, derived from the Census of Manufacturing Industries 2015-16. Similarly, Small Scale Manufacturing  information is also based on the survey conducted in year 2015 covering  industrial and household units engaged in manufacturing activity having less than ten employees.

During FY2022.LSM with 9.2 per cent of GDP dominated the overall manufacturing sector accounting for 74.3  per cent  of the sectoral share followed by Small Scale Manufacturing which accounted for 2.0 per cent of total GDP and 15.9 per cent sectoral share.

The industry in Pakistan  also experienced  interlude in business activity  lading to slowdown in its performance in FY2020. Nevertheless, LSM proved  to be resilient  and gained the growth momentum from the very start of FY2021 owing to gradual opening of economic activities and contingency measures from fiscal and monetary side in the form of  industrial support package, construction sector package, auto policy, ultra-low policy rate, housing finance and export financing facility coupled with COVID-19 vaccination.

Although Pakistan had survived from the COVID-19 crisis, but still it faced daunting tasks in FY2022 such as  controlling stimulus  induced fiscal deficit, curtailing  widening current account deficit, managing pressure on  exchange  rate along with  achieving  a sustaintable  post-pandemic recovery. Moreover, pent-up demand fueled by stimulus and pandemic  disruptions accelerated  inflation around the world. Additionally, Russia-Ukraine War continues to st9oke strong  inflationary  winds  throughout th global economy resulting in damage in the form of  higher food and energy prices or new supply chain disruptions. Thus, economic recovery from  virus-induced  economic recession would remain  uncertain in the coming years  because of uncertainty  in pandemic resurgences   as well as  uncertain geo-political tensions.