LSM posts 2.04pc growth

ISLAMABAD   -   Large-scale manufacturing (LSM) has posted growth of 2.04 percent in March 2024 over the corresponding pe¬riod of the previous year.

According to data released by the Pakistan Bureau of Statistics (PBS) here, the LSMI index reached 115.53 points in March 2024 as against 113.21 in the same month of the last year, showing an increase of 2.04 percent. Meanwhile, the LSM growth has narrowed by 0.10 percent in ten months (July to March) of the current fiscal year when compared with the same period of last year.

The PBS data showed that the main contributors towards overall growth of -0.10 percent are, food (0.31), tobacco (-0.66), textile (-1.47) garments (0.77), paper and board (-0.05), petroleum products (0.31), chemicals (0.60), pharmaceuticals (1.08), iron and steel products (-0.11), electrical equipment (-0.24), automobiles (-1.01) and furniture (0.60). The production in July-March 2023-24 as compared to July-March 2022-23 has increased in food, wearing apparel, coke and petroleum products, chemicals, fertilisers, pharmaceuticals, machinery and equipment and furniture while it decreased in tobacco, textile, paper and board, non-metallic mineral products, iron and steel products, electrical equipment, automobiles and other transport equipment.

According to the ministry of finance, the LSM cycle usually follows the cyclical movements in the main trading partners, but since it is focused on the main industrial sectors and not on total GDP, it is somewhat more volatile than the cyclical component of GDP in Pakistan’s main export markets. The economic situation in the major export markets has been improving since October 2022 and now their cyclical component of GDP is above the rd neutral 100 benchmark for 3 consecutive month, as evident from the aggregate CLI of those markets. The cyclical component of LSM recorded above the potential level for the months of December and January FY2024, despite the challenging environment for the industrial sector.

Nonetheless, the cyclical component of LSM is recorded below potential for February mainly due to the YoY negative growth of high-frequency variables such as cement dispatches, production of automobiles, textile production, etc in the month of February. However, it is expected that LSM output will show positive YoY growth in the remaining months of the current fiscal year due to better crop production and improved foreign demand. YoY growth of LSM will also benefit in the short term from low base effects in the corresponding months of FY2023.

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