Report Engineering Post
Historically, Pakistan’s manufacturing sector has played a crucial role in the country’s economic growth. It has contributed significantly to exports, accounting for about 71 percent, and has employed 14.9 percent of the labor force. As such, this obviously underscores the potential for its and further growth and development in the sector, thus instilling confidence in the future of Pakistan’s economy.
The performance of Large-Scale Manufacturing (LSM) was primarily affected by unfavorable domestic and global events. Supply chains disruptions and the lasting effects of the devastating floods have been ongoing since the beginning of FY 2024. These disruptions have obviously impacted the supply chain and external and fiscal accounts, leading to inflationary pressures and a slow down in economic activity. Additionally, industrial activity was also subdued due to a decline in foreign exchange reserves and pessimistic sentiments in the foreign exchange market. Furthermore, unprecedented global supply chain disruptions have further strained the sector.
Political and economic uncertainty had also hindered before the general elections . Economic activity began to rebound in the second half of FY 2024, driven by improved confidence and recovery in various sectors, although the pace of growth remained below the necessary threshold. Global demand slump, currency devaluation, and a widening current account deficit severely restricted the federal government’s flexibility, particularly in maintaining the financial discipline amidst stringent financial conditions.
It was important to note that increasing the exports without substantial products to export was pretty futile. The dependency on the imports was quite evident in sectors like automobiles, where a considerable portion of auto parts was sourced from abroad duet the absence of domestic fabrication. This reliance on the costly imports thus depleted a substantial portion of the country’s foreign exchange reserves and posed a significant hurdle to the national economy.
