Pak industrial output declines

Industrial output went down in several key sectors during the just ended fiscal-2012 unveils an official report, in a week which saw political tensions and anti-government feelings rise.

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Published: Mon 23 Jul 2012, 10:31 PM

Last updated: Tue 7 Apr 2015, 12:23 PM

The industrial output, particularly Large Scale Manufacturing, or LSM, is down to 1.26 per cent, Federal Bureau of Statistics, or FBS report on first eleven months — July-May — of fiscal year 2012 that ended June 30, unveils. For several economic and other reasons, demand for many a key products has gone dormant, but will rise again.

The report provides a good window for future investors as to where to invest, and where to expand the existing industrial units.

The LSM growth in May fiscal year 2011 was still a notch higher at 1.4 per cent. But even that is far from the norm of higher output growth over the years.

The output of overall industry, including LSM, rose 3.56 per cent in July-March fiscal year 2012. It compares with 2.96 per cent in the like period of fiscal year 2011, says Ministry of Finance. A modest improvement was seen in LSM in July-March fiscal year 2012.

Its output increased by 1.05 per cent. against the government-set target of 2.0 per cent, compared to a 0.98 per cent growth in the like period of fiscal year 2011, the Ministry says. But the FBS statistics for eleven months tell a more updated story of LSM.

Business and economic analysts are of the view, LSM sector growth remained sluggish due to an acute energy crisis, higher electricity and gas tariff, poor law and order situation, low domestic demand and the tight monetary policy of the central bank making bank credit costly, ranging 16 to 18 per cent. Reduced public spending on infrastructure and public services, also reduced demand for LSM and industrial products.

Inflation at 12 per cent plus also hit demand and industrial growth. It translated into a reduced GDP growth target of 4.2 per cent, to 3.7 per cent, Ministry of Finance says. However, IMF puts it at only at 2.6 per cent for fiscal year 2012.

Individual industries were impacted to varying degrees. Cotton yarn production was up 0.74 per cent, cotton textiles 0.46 per cent, jute goods 2.49 per cent, sacking 9.04 per cent, and paper and board 23.60 per cent against like period of fiscal year 2011.

Cigarette output was down 2.3 per cent, coke for steel 37.6 per cent, pig iron 42.8 per cent, tractors 37.43 per cent, and trucks 15.18 per cent. The output of iron and steel products was down 25.26 per cent, electronics 7.86 per cent, chemicals 2.92 percent, rubber products 24.93 per cent engineering goods 11.18 per cent. Deep freezers were down by a big 39.02 percent, electric fans 2.99 per cent, electric motors 14.7 per cent, switchgear 33.61 percent, TV sets 37.52 per cent, storage batteries 17.15 per cent, and bicycles 25.69 per cent.

However, the output of the pharmaceuticals rose 7.84 per cent, non-metallic mineral products 2.68 per cent, and fertilisers 0.95 per cent. Production of refrigerators grew 8.15 per cent, electric bulbs 2.036 per cent, electric transformers a whooping 70.13 percent and electric tubes 25.04 per cent. The highest growth was recorded by food, beverages, and sugar. Statistics reveal sugar was up 12.47 per cent, vegetable ghee 2.11 percent, cooking oil 3.0 per cent, tea 16.34 per cent and wheat 3.69 per cent.

Jeeps and cars were up 11.84 per cent, light commercial vehicles 9.41 per cent motorcycles 1.31 per cent and buses 12.81 per cent. Tractors were down 37.43 and trucks were down 15.18 per cent. But the potential for industry, specially LSM, stays huge, as soon as demand, economic factors, and the political environment improves. So here is a window of opportunity.

Views expressed by the author are his own and do not reflect the newspaper’s policy

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