Islamabad:(Parliament Times) The All Pakistan Business Forum has underscored the need for a review of economic policies, as large-scale manufacturing (LSM) output has dropped by 10.3% in the first 11 months of fiscal year 2019-20.APBF President Syed Maaz Mahmood said that the large industrial sector, which had been shrinking even before the deadly pandemic hit the economy, further contracted by 10.3% in this period.
Syed Maaz Mahmood said that COVID-19 has adversely impacted the world economy as well as the Pakistan trade and industrial sectors.
The respiratory disease of Covid-19 had started impacting Pakistan’s economy from the third week of March this year. But large industries had been struggling even before the pandemic hit the economy.
APBF President said that the industry can pick up pace in new fiscal year with the implementation of envisaged policy measures. The plan anticipates the private sector investment to lead the revival of economic activity with the help of necessary policy and regulatory support through public sector. However, in the high production of cost, it is unlikely that private sector can trigger economic expansion or increase investment.
He said that the LSM sector has been shrinking since the start of fiscal year 2019-20, which began in July 2019, due to double-digit interest rate, currency depreciation resulting in a high cost of inputs, higher taxes and increase in electricity and gas prices.
After the spread of the disease, the government has conveniently thrown the responsibility on to Covid-19 instead of correcting its economic policies. Pakistan is de-industrializing with the manufacturing sector’s contribution to the gross domestic product (GDP) declining every year.
Quoting the PBS data, Maaz Mahmood said that out of 15 major industries, being assessed by the PBS, only three recorded some growth while output in 12 industries shrank in July-May of fiscal year 2019-20.
Data collected by the Oil Companies Advisory Committee (OCAC) showed that 11 types of industries registered average negative growth of 1.3% in first 11 months of FY20. In May alone, the OCAC-monitored industries reported 1.2% negative growth on a year-on-year basis. The Ministry of Industries and Production, which monitors 15 industries, reported a 7.9% decline in the growth of these industries. In May 2020, the ministry reported a contraction of nearly 19% over the same month of last year.
Similarly, the provincial bureaus reported a 1.2% contraction in 11 industries in first 11 months of the previous fiscal year. The provincial bureaus reported that these industries contracted 4.6% in May. Manufacturing of textile products dipped 10.7% in 11 months of the last fiscal year. Food, beverages and tobacco sector saw contraction of 3.8%, coke and petroleum products 20.9%, pharmaceuticals 4.4%, chemicals 7.5% and non-metallic minerals 3.8%. The automobile sector registered a nearly 45% contraction in July-May FY20. Output of iron and steel products shrank 17%, electronics 25.6%, leather products 6%, engineering products 18.1% and wood products about 39%.
International financial institutions and independent economists have been making varying forecasts for chances of economic revival in the current fiscal year. The International Monetary Fund (IMF) has projected a nominal growth of 1% while the World Bank is forecasting contraction of over 2%.
APBF President said that it is unfortunate that the LSM, which constitutes 80 percent of manufacturing and about 11 percent of the overall GDP, had recorded negative growth for eleventh months in a row amid sluggish economic activities in the country before coronavirus spread, he lamented.
He said that though energy shortage and law and order kept the economy hostage during the last many years, the government now should have a clear vision on the economic issues, which would help resolve industries’ problems at the earliest.