Ministry of Finance

Manufacturing In Pakistan

Large-scale manufacturing registered a negative growth of 5.35% in July-January 2008-09 as against reasonable positive growth of 5.7% in the comparable period of last year. This implies that large-scale manufacturing sector is exhibiting signs of moderation on the one hand and acute power shortages along with several other factors like rising cost of doing business, demand compression in the export sector, deteriorating law and order situation in the country. The negative growth of 8.9 percent in the month of January 2009 may be looked into the backdrop of impressive growth rate of 9.5 percent in January 2008 which placed a high base effect. Going forward the negative growth may improve to some extent because of lower base effect and some improvement in energy supplies. The LSM growth is adversely impacted by a sharp reduction in demand from both domestic and international factors. There was negative growth all around in all major groups with one or two exceptions.
Services sector has exhibited resilience to fluctuations in the economic activity and FDI in the services sector witnessed healthy increases. The FDI inflows in the services sector provide some anecdotal evidence regarding growth performance. The FDI inflows in the telecommunications, financial businesses and personal services are up by 6.7 percent, 75.3 percent and 3.0 percent respectively in the first eight months (July-February) of the current fiscal year. Similarly, improved prospects in transportation & storage sub-sectors on the back of relatively better production in major crops, strong contribution by finance and insurance sector and augmented administrative and defence related spending will provide support to adequate level of growth in the services sector. These prospects of the services sector would be neutralized to some extent by negative growth in the LSM, imports contraction, shrinking profits in the telecommunication sector. Leading indicators pertaining to the major sector wholesale and retail trade points towards a reasonable growth in this sub-sector. The targeted growth of 4.1 percent is already almost half of last year’s actual 8.2 percent.