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Pakistan's industrial sector may not achieve 10.5 per cent growth target

ISLAMABAD - Pakistan is unlikely to achieve its annual 10.5 per cent growth target in the industrial sector during the curent financial year following the sector's decline in output by more than four per cent in December 2007 for the first time in the recorded history.

The recession in manufacturing production was witnessed in December 2007, when it declined by 4.12 per cent over the same month last year, Federal Bureau of Statistics (FBS) data issued yesterday. The worst energy crisis, reduced working days on the back of strikes in the wake of assassination of former prime minister Benazir Bhutto, have been considered the sole factors for this slump in production.

Analysts said the negative growth in industrial production in December dampened the chances of any reverse in industrial growth in the months ahead to achieve the 10.5 per cent growth target. Industrial growth, as measured by quantum index numbers, showed that all major sectors like manufacturing, mining and electricity registered a slide in production growth. This also resulted into further widening the gulf between demand and supply issue.

The growth in industrial production had been steadily on decline for the last three years as it declined to 8.8 per cent in the year 2006-07 from 19.9 per cent in the year 2004-05 owing to capacity constraints and closure of many units as a result of high cost of doing business in the country.

An official in the finance ministry said the negative growth was only due to fewer working days in December. He ruled out the impression of the energy shortages, which led to drastic reduction in industrial growth.

The industrial production has grown by paltry 4.46 per cent in the first half year (July-December) of the current fiscal year over the last year. This reduction in industrial output would also affect the country exports, which are now unlikely to reach the target of $19.2 billion. According to the figures, the production of cigarettes has decreased by 11.25 per cent, while cotton yarn grew by 3.55 per cent and cotton cloth production 2.73 per cent during the month of December 2007 this year over last year. In the food sector, the vegetable ghee production declined by 10.94 per cent, cooking oil production by 4.81 per cent and starch and its products by 5.24 per cent in the month under review. However, wheat production grew by 0.10 per cent, beverages 19.82 per cent in December 2007 over the last year.

Among the electrical production, refrigerators recorded a negative growth of 5.18 per cent, deep freezers 23.89 per cent, electric bulb 5.56 per cent, electric tubes 0.60 per cent, electric motors 8.8 per cent, electric meters 56.96 per cent and electric transformers 42.89 per cent during the month under review over the last year.

However, production of air-conditioners up by 47.76 per cent, electric fans 31.51 per cent, switch gears 58.02 per cent, TV sets 43.43 per cent and bicycles 0.80 per cent during the period under review over the last year.

The production of paper & board has also dropped by 1.81 per cent, petroleum products 26.62 per cent and cement 4.94 per cent in December 2007 over last year.

The production of glass sheet declined by 13.47 per cent, billets 6.57 per cent and HR sheets 50.56 per cent during the period under review over the last year. However, the steel products witnessed a growth of 32.13 per cent in Dec 2007 over last year.