Pakistan’s large-scale manufacturing output declines 3.5% in February

Pakistan’s Large-Scale Manufacturing (LSM) sector contracted by 3.5% in February 2025 compared with the same month last year, marking continued challenges for the industrial sector, according to data from the Pakistan Bureau of Statistics (PBS).

Ahsan Mehanti, at Arif Habib Corporation, attributed this downturn to rising power costs and decreasing export volumes.

“The manufacturing sector is facing significant challenges as higher electricity prices raise production costs, making goods less competitive in international markets”.

Additionally, a drop in exports is further straining the sector, reducing revenue inflows and limiting growth opportunities.

Moreover, frequent fluctuations in the currency's value are causing uncertainty for businesses and investors, making it harder to plan and operate efficiently.

“The instability of the rupee is also deterring Foreign Direct Investments (FDIs), as investors seek more stable economic environments to ensure their capital yields predictable returns”.

The decline follows a broader trend, with the first eight months of the fiscal year 2025 (8MFY25) showing a 1.9% drop in LSM output compared to the same period last year.

Key segments of the market exhibited mixed performance, with textiles, accounting for 18.16% of LSM, experiencing a modest decline of 0.3%.

Food, which holds a 10.69% weight, recorded a sharp drop of 5.0%. Conversely, coke & petroleum products (6.66% weight) soared by 23.4%, while automobiles (3.10% weight) showed substantial growth of 30.7%.

Fertilizers (3.93% weight) and chemical products (2.55% weight), however, witnessed steep decreases of 17.9% and 18.5%, respectively.

The LSM index has fluctuated over the past two years, with growth rates ranging from -10% to marginal recoveries. The recent downturn reflects persistent economic pressures, including high input costs and reduced demand.

Analysts warn that sustained declines in major sectors like textiles and food could further strain Pakistan’s industrial output and economic growth.