ISLAMABAD:- Despite the better performance of Paksitani industrial sector during the outgoing fiscal year, the future perspective of the Pakistani industrial sector are uncertain as risks still prevails owing to geopolitical environment, surge in energy prices, and corona virus, mentioned in the Economic Survey Report 2021-22.
According to the report, The LSM sector picked up the momentum and staged the overall growth of 10.4 percent during July-March FY2022. The performance was broad based on the back of strong growth of high weighted sectors such as textile, food, wearing apparel, chemicals, automobile, tobacco, and iron & steel products.
Although Pakistan has survived from the COVID-19 crisis, but it faced the daunting tasks in FY2022 such as controlling stimulus induced fiscal deficit, curtailing widening current account deficit, managing pressure on exchange rate along with achieving a sustainable post-pandemic recovery. Moreover, pent-up demand fueled by stimulus and pandemic disruptions accelerated inflation around the world. Additionally, Ukraine War continues to stoke strong inflationary winds throughout the global economy resulting damage in the form of higher food and energy prices or new supply-chain disruptions.
Thus, economic recovery from virus-induced economic recession would remain uncertain in the coming years because of uncertainty in pandemic resurgences as well as uncertain geopolitical tensions.
It is also pertinent to mention here that operationalization of special economic zones under CPEC in Nowshera, Pishin and Faisalabad further paved the way for fast tracked industrial development which is pivotal to achieve inclusive and sustainable economic growth.
Supply-side disruptions which were originated from pandemic, is still in place due to emergence of new variants of corona virus. Ukraine-Russia conflict has further escalated this disruption. Thus, internationally commodity prices are increasing significantly along with intense uncertainty in the market confidence.
All these may result in severe challenges in LSM performance as industrial production is mainly dependent on import of capital goods. Thus, the future prospects of industrial sector are uncertain as risks still prevails owing to geopolitical environment, surge in energy prices, and new variants.
Textile sector still the highest among all sectors of LSM. The sector grew by 3.2 percent during July-March FY2022 as compared to 8.0 percent in the same period last year. Wearing apparel has showed the growth of 34 percent against the contraction of 35.6 percent.
The food group witnessed the growth of 11.7 percent during the period under review against 27.1 percent same period last year.
Automobile sector marked a vigorous growth of 54.1 percent during July-March FY2022 against 21.6 percent growth last year. New Auto Policy, to promote new technologies including Electric Vehicles (EVs) and Hybrid, and accommodative monetary policy to promote auto financing paved the way to grew automobiles production.
Pharmaceuticals growth witnessed a dip of 0.4 percent during July-March FY2022, against the growth 10.5 percent last year, triggered by hefty decline observed in capsules, injections, tablets and galenicals. Electrical equipment declined by 1.1 percent against the hefty shrink of 17.1 percent.
The chemical products showed the growth of 15.2 percent against 14.5 percent same period last year. On the other hand, Fertilizers production showed a meager growth of 3.3 percent as compared to 5.9 percent growth during last year.
The spinning sector is the backbone in the ranking of textile production. At present, as per record of Textiles Commissioner’s Organization (TCO), it comprises of 517 textile units (40 composite units and 477 spinning units) with 13.414 million spindles and 198,801 rotors installed and 11.338 million spindles and 126,583 rotors in operation with capacity utilization of 84.55 percent and 63.67 percent, respectively
The production of cotton cloth by mill sector has slightly increased by 0.29 percent, while non-mills performance remained subdued and recorded negative growth of 0.01 percent during July-March FY2022. However, the exports in term of quantity and value both increased by around 9 percent and 26.5 percent.
Owing to huge potential and demand, the Readymade Garment Industry exports show a massive growth of 33.9 percent in quantity and 26.2 percent in value from 27.8 million dozen to 37.3 million dozen worth US$ 2,863.57 million during JulyMarch FY2022 as compared to US$ 2,268.38 million during July-March FY2021.