Business

Contraction in LSM output dims prospects of growth this fiscal year

Published

2 years ago

Farwa

PBS data shows LSM output drops by 25% in March.
Big industries output witnessed highest-ever decline since COVID-19.
Steep contraction will increase pace of inflation, put jobs at risk.

ISLAMABAD: A steep contraction in output of large-scale manufacturing (LSM) in March has faded the prospects of achieving a positive growth figure, The News reported Tuesday.

The delay in the revival of the International Monetary Fund (IMF) programme has choked the economy consequently the LSM contracted massively; as a result, it can halt economic activities, boost already-high inflation and increase unemployment.

Although the Ministry of Finance has projected a provisional GDP (gross domestic product) growth rate of positive 0.8% in its revised estimates, the latest figures of LSM for March 2023 demonstrate that it remained negative by 25%, compared to the corresponding month of the last year.

The big industries’ output witnessed the highest-ever decline since COVID-19 pandemic. In the first nine months (July-March) of the outgoing fiscal year, the LSM witnessed a contraction of 8.1%.

“Keeping in view the performance of the industrial and agriculture sector, the provisional growth figure may turn into negative up to -1%. Earlier, the efforts were underway for turning the provisional figure into positive ranging from 0 to 0.5%,” sources confirmed to The News.

The National Accounts Committee (NAC) is scheduled to hold its meeting within the ongoing week to calculate the provisional growth figures for the outgoing financial year 2022-23.

Dr Khaqan Najeeb, former finance ministry adviser, said the industrial sector had been unable to secure letters of credit due to the country being in a dollar liquidity crunch.

The lack of access to imports has hurt industrial production as evident in the fall of LSMI output by 8.11% in the first nine months (July-March) of 2022-23.

“The revival of the IMF programme would have ensured a flow of dollars from multilaterals, bilateral and commercial monies to ease the imports and unclog the economic activity,” he said.

“It is likely that growth would be muted in the outgoing fiscal year with a contraction in the manufacturing and agriculture sector. This would create further unemployment and rise inflation due to shortfall in supplies,” he concluded.

Business

E&P Companies Will Invest $5 Billion in Pakistan’s Petroleum Industry

Published

2 days ago

Farwa

Over the next three years, local and foreign companies involved in Pakistan’s oil and gas exploration and production sector have shown a strong desire to invest more than $5 billion in the nation’s energy sector.

Recent changes to the Petroleum Policy and the implementation of an exclusive tight gas policy, which provide better incentives and a more investor-friendly regulatory framework, are credited with the increase in investor confidence.

These strategic changes are expected to boost domestic energy production, open up new avenues for growth, and draw large amounts of both domestic and foreign investment.

Business

With inflation slowing, the SBP is anticipated to lower the policy rate for the eighth time in a row.

Published

2 days ago

Farwa

Businesspeople anticipate another reduction in the policy rate when the State Bank of Pakistan’s (SBP) Monetary Policy Committee (MPC) releases the updated rate.

The interest rate for the upcoming two months will be announced by the central bank. It is still unclear if the rate will stay the same or be lowered to reflect stakeholder expectations.

According to experts, the policy rate will be lowered in order to further boost the nation’s economic sector.

Interest rates may be lowered for the seventh time in a row if the inflation rate declines significantly more than anticipated.

In its last six sessions, the MPC had cut the policy rate by 10 percent. In January 2025, it decreased the rate by one percent to 12pc.

12PC POLICY RATE

In January, the State Bank of Pakistan (SBP) announced cut in key policy rate by 100 basis points (bps) to 12 percent from 13pc in line with expectations of the business community.

The policy rate, which had been at 22 percent since June 2024, was slashed by 1,000 basis points to 12 percent.

The SBP governor said the decision was taken with careful consideration. “Although inflation is expected to decline next month (February), core inflation remains a pressing concern,” he stated.

Ahmed highlighted strong remittance inflows and robust export growth as key factors supporting the current account.