Pakistan industrial production contracts 3.8% in November

Pakistan industrial production is still not out of the woods, with a 3.8% contraction in November as compared with 1.6% growth in the same month last year, according to the data posted on the website of Pakistan Bureau of Statistics on Wednesday.

The Large Scale Manufacturing Index or LSMI shrank to 1.25% during July to November despite tremendous growth of 50.70% in the automobile sector. This was because contraction in sectors such as iron and steel by 12.20%, cement by 9.66%, sugar by 8.98%, and petroleum products by 2.5% evaporated all gains.

The sectors showing decline during the first four months of the current fiscal year compared to July-November FY24 are wood products (0.72%), chemicals (1.43%), chemicals products (6.95%), rubber products (1.76%), non-metallic mineral products (13.98%), iron and steel products, (12.19%), fabricated metal (18.97%), electrical equipment (19.64%), machinery and equipment (43.09%), and furniture (59.14%).

The decline in cement, steel, and iron products can be attributed to muted activity in the real estate sector because of the rise in taxes, documentation, and harsh rules expected to be levied soon on non-filers, which would likely be barred from buying flats or plots.

Moreover, slower economic activity and higher inflation has reduced people's purchasing power which has nearly subdued buying activities in the real estate sector.

Higher inflation also shrank businesses' expansion activities. The economy is forecast to grow by merely 3.5% in the current fiscal year from the last year’s growth of 2.4%.

The sectors showing growth during July-November FY25 compared to July-November FY24 are food (1.72%), tobacco (30.85%), textile (2.28%), wearing apparel (11.49%), paper and board (2.95%), pharmaceuticals (1.88%), computer, electronics and optical products (0.37%), automobiles (50.70%), and other transport equipment (27.37%).

The government has set a target of 4.4% for the manufacturing sector which appears to be unachievable.

During FY24, the government set a target of 4.3% but achieved a growth of 2.4% against the contraction of 5.3% a year ago, according to the government data.