Large-Scale Manufacturing Industries (LSMI) in Pakistan contracted by 1.87% during the first half (July-December) of FY 2024-25, as reported by the Pakistan Bureau of Statistics (PBS). This decline reflects the challenges faced by the sector amid a combination of economic pressures, rising costs, and supply chain disruptions. Compared to the same period last year, production in major manufacturing sectors such as food, petroleum, and iron & steel has seen a sharp reduction, which has significantly impacted overall industrial output.
On a year-on-year (YoY) basis, LSMI recorded a 3.73% decrease in December 2024 compared to December 2023. Despite this overall downward trend, production saw a substantial recovery in December 2024, showing a 19.07% increase on a month-on-month (MoM) basis compared to November 2024. This month-to-month growth provides a glimmer of hope for the industry, suggesting that certain sectors may be beginning to stabilize after a period of downturn.
The provisional quantum indices for LSMI in November 2024, calculated using the 2015-16 base year, were compiled based on data from a range of source agencies. These indices highlight significant sectoral variations, with certain industries showing positive growth while others continued to struggle.
Key sectors that contributed to the overall decline in LSMI include food (-0.13%), petroleum products (-0.02%), cement (-0.55%), iron & steel (-0.59%), electrical equipment (-0.60%), machinery & equipment (-0.15%), and furniture (-2.27%). These declines are largely attributed to a combination of domestic and international challenges, including high production costs, raw material shortages, and a decline in domestic demand. The food sector, in particular, faced difficulties related to inflation, which pushed up prices for both manufacturers and consumers, leading to reduced consumption.
On the other hand, several sectors showed positive growth despite the broader decline. Tobacco production increased by 0.25%, while textiles grew by 0.36%. The garment sector witnessed the strongest growth, with a notable increase of 1.43%. The automobile sector also performed well, with a 0.77% increase in production. Other transport equipment also saw growth, signaling resilience in these areas despite the overall downturn.
When comparing the first half of FY 2024-25 with the same period last year (FY 2023-24), production showed mixed results across various sectors. Industries such as tobacco, textiles, apparel, and automobiles saw positive growth, driven by both domestic consumption and export demands. In contrast, sectors such as food, petroleum products, chemicals, mineral products, iron & steel, electrical equipment, machinery, and furniture saw significant declines. The drop in these key sectors reflects broader economic challenges, including reduced consumer spending, energy crises, and inflationary pressures that have hindered manufacturing activities.
The contraction in LSMI growth is a concern for the broader economy, as the manufacturing sector is a critical driver of employment and economic stability. Policymakers are now focused on addressing the underlying issues affecting industrial output, including tackling inflation, improving the supply of raw materials, and incentivizing investment in sectors with growth potential.
In conclusion, while LSMI in Pakistan faced an overall contraction in the first half of FY 2024-25, there are signs of recovery in specific sectors. Policymakers and industry stakeholders will need to continue monitoring these trends closely and implement measures to support the growth of key manufacturing sectors, particularly textiles, garments, and automobiles, which have shown resilience despite economic challenges.
