Large Scale Manufacturing Plunges 22.95% in March 2020 Amid COVID-19


Amid the coronavirus pandemic, Pakistan’s Large Scale Manufacturing (LSM) sector’s output plunged by a massive 22.95% during March 2020 on a year on year basis owing to the closure of industries due the lockdown.

Similarly, the LSMI on a month-on-month (MoM) basis witnessed a reduction of 21.99 percent in March 2020 as compared to February 2020, according to Pakistan Bureau of Statistics (PBS). It is to be noted that LSM accounts for 80 percent of the industrial sector and accounts for nearly 10.7% of the national output. In comparison, small-scale manufacturing makes up for just 1.8% of GDP and 13.7% of the secondary sector.

During July-March, it witnessed a decline of 5.4% from a year ago. Government had imposed a complete lockdown in late March to prevent COVID-19 from spreading.

A.A.H Soomro, managing director at Khadim Ali Shah Bukhari Securities said,

Production has declined Large, Medium and Small scale production because of lockdown. We shouldn’t expect a V-shaped recovery here. It would take months to get closer to the normal. However, lifting of the lockdown from June would bring many industries back to higher utilization.

He further stated that LSM data reflects the unemployment woes. However, the government has partially lifted the lockdown and allowed export-oriented industries to resume operations.

In March, the contraction was seen due to a fall in textile output that fell 26% year-on-year, food, beverages and tobacco -20.55%, automobiles -49.5% and coke and petroleum products -47.4%. However, fertiliser sector witnessed an increase of 4.4% year-on-year in March.

All three data collection authorities in March registered a significant decline in production. OCAC, logging outputs of 11 oil and petroleum products, measured 47.41% year-over-year fall in outputs. Ministry of industries, measuring output trend of 36 items, recorded a 26.05% decline in production. Provincial bureau of statistics, counting production of 65 products, logged 9.17% negative growth.

The production in Jul-Mar 2019-20 as compared to Jul-Mar 2018-19 has increased in Non-Metallic Mineral Products, Fertilizers and Paper & Board while it has significantly decreased in respect of Textile, Food, Beverages & Tobacco, Coke & Petroleum Products, Pharmaceuticals, Automobiles, Iron & Steel Products and Electronics.

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