Large-scale manufacturing (LSM) in Pakistan has shown a positive sign of recovery, recording year-on-year growth of 2.52 percent in August.
This marks a significant shift from the 11 consecutive months of contraction experienced earlier. On a month-on-month basis, LSM exhibited a growth of 8.44 percent, indicating a resurgence in industrial production. This positive momentum is closely linked to the easing of opening letters of credit (LCs), which began on July 1, facilitating smoother industrial operations.
The revival of LSM can be attributed to increased production within various sectors. The garments sector played a pivotal role in this growth, alongside the food, petroleum products, and pharmaceutical products industries. This is encouraging news for Pakistan’s economy, which has faced substantial challenges due to the COVID-19 pandemic and other factors. However, it is essential to sustain this positive trend to ensure economic stability and growth.
The improved input situation, resulting from the lifting of import restrictions, has created favorable conditions for sectoral growth, according to the Finance Ministry. Despite these positive indicators, numerous sectors continue to face challenges, such as tight financing facilities and persistent inflationary pressures.
The manufacturing sector’s downturn has had a significant impact on employment, resulting in job losses and decreased production capacity, which is a concerning aspect of the country’s economic landscape.
The textile sector, a critical component of Pakistan’s industrial landscape, faced a production decline of 16.20 percent in August compared to the previous year. Yarn and cloth production experienced negative growth of 29.88 percent and 17.21 percent, respectively. On the other hand, the production of garments increased by 21.21 percent in August, signifying a more positive performance within this subsector.
In the food group, wheat and rice production declined slightly, by 0.51 percent in August compared to the previous year. Nevertheless, the production of cooking oil surged by an impressive 33.35 percent, while vegetable ghee and blended tea also exhibited growth, at 8.48 percent and 21.97 percent, respectively.