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.