Pakistan's large-scale manufacturing declines by 1.78% in FY25's seven months

Large-scale manufacturing (LSM) output in Pakistan contracted by 1.78% during the first seven months of the current fiscal year, according to data released by the Bureau of Statistics.

The decline in industrial performance from July to January reflects challenges in key sectors of the economy.

In January alone, LSM output saw a year-on-year decrease of 1.22%. However, when compared to December, manufacturing output in January grew by 2.09%, hinting at some recovery.

The Pakistan Bureau of Statistics reported significant downturns in several industries. Between July and January, the food sector’s output fell by 2.67%, while machinery and equipment production plummeted by 26.84%.

The State Bank of Pakistan highlighted in its monetary policy statement earlier that the drag in LSM growth is primarily driven by a few low-weight sub-sectors, which have overshadowed gains in more critical industries, such as textiles, pharmaceuticals, automobiles, and petroleum, oil, and lubricants.

Furniture manufacturing faced the steepest decline, with output shrinking by a staggering 61.61% during the same period. Other sectors, including fertilizers, chemicals, iron, steel, wood, and electrical products, also recorded decreases in production.

Despite these declines, there was notable growth in a few areas. Tobacco production surged by 20.24%, and the beverage sector witnessed a modest increase of 0.19%. The automobile industry emerged as a strong performer, with a 45.74% increase in output over the seven months.

The pharmaceutical and textile sectors also contributed positively during the period, helping offset losses in less-weighted industries.

According to the central bank, high-frequency indicators, including sales of automobiles and POL products, cement dispatches, and improved import volumes, point to signs of resilience in the economy. Additionally, pulse surveys have indicated improved consumer and business confidence.

The monetary policy committee of the central bank remains optimistic, forecasting a rebound in economic activity during the second half of fiscal year 2025. The central bank attributed this anticipated recovery to easing financial conditions and improved momentum across key sectors.