Report by Engineering Post
The Manufacturing and Mining Sectors, with their significant contribution of 13..6 percent to the Gross Domestic Product (GDP) in FY 2024, have the potential for further growth.
According to the National Account Statistics, these sectors registered a growth of 2.4 percent and 4.9 percent respectively, compared to a decline of 5.3 percent and 3.3 percent during the last year.
This positive trend was particularly noteworthy in Pakistan, where Manufacturing plays a significant role in the industrial sector, making up 11.9 percent of the GDP. The manufacturing sector was diverse, consisting of Large -Scale Manufacturing (LSM), Small-Scale Manufacturing (SSM) and Slaughtering, according to the System of National Accounts. Historically, LSM dominated the manufacturing sector, accounting for as much as 69.3 percent of Manufacturing sector and 8.2 percent of the overall GDP. Small-scale manufacturing comprises 19.5 percent of the manufacturing sector contributing 2.3 percent to the GDP.
The performance of the LSM was a key indicator of the overall industrial health, and it was assessed monthly through the Quantum Index of Large Scale Manufacturing industries (QIM).
During July-March FY 2024, LSM had recorded a slight decline of 0.1 percent, indicating a significant improvement from the 7.0 percent decline last year. However, it was important to acknowledge the challenges faced by the textile sector, a major component of LSM. Rising input costs, lower export values, competition from China , and higher power tariffs had led to a significant reduction in the production. The discontinuation of the Export Finance Scheme and high interest rates had further exacerbated the situation.
Construction activities had declined due to higher financial costs, reduced incomes, and lower government spending . Tight monetary conditions and political uncertainty had also played a role along with increased coal prices and decreased demand.
Additionally, rather sluggish activity in the industries like automobiles and heavy machinery had also led to lower steel utilization. The automobile faced reduced production owing to the low demand and import restrictions.
