Govt warned of missing growth target in major sectors
The Friends of Business & Economic Reforms (FEBR) has warned the government of missing its annual growth targets in three major sectors, including agriculture, industry and services, stressing the need for dropping markup rate and energy prices for local industry to stimulate industrial growth further.
“Businesses were bearing the brunt of high cost of doing business, very hefty interest rate and documentation drive by the Federal Board of Revenue,” observed FEBR President Kashif Anwar.
In a statement issued in Lahore on Saturday, he hailed the positive growth in large-scale manufacturing (LSM) after a long time, saying it would help create jobs, as the large industries have bounced back last month, posting a healthy growth of nearly 10 percent.
While praising PM Imran Khan for reversing his decision regarding increase in power tariff for the export sector, he said that the whole industry, being part of the economy, should be given relief. He said that increases in electricity prices or additional charges to the bills are no solution to the power sector problems. The government should address inefficiencies in the system.
Anwar observed that the LSM output increased by 9.66 percent in December over the same month of the last year, breaking a cycle of constant contraction in past over one year, which is a good news.
He said that this trend helped bring the overall cumulative contraction in the LSM sector down to 3.4 percent during July-December period of fiscal year 2019-20. During five months, the contraction in LSM sector was close to 6%, which significantly came down to 3.4 percent due to better performance in large industries in December.
In its first quarterly report, the central bank noted that while large export-oriented and import-competing industries remained bullish on fundamentals, they refrained from taking a long-term view.
Quoting the data of PBS, Anwar said that out of 15 major industries, eight recorded growth while the output in seven industries contracted in the July-December period.
Data collected by the Oil Companies Advisory Committee (OCAC) showed that 11 types of industries registered on an average 0.7% negative growth in the July-December period of the current fiscal year. But in December alone, the OCAC-monitored industries reported 0.1% growth.
The Ministry of Industries, which monitors 15 industries, reported 1.8% decline in the growth of these industries. But on a yearly basis, the Ministry of Industries reported 7.4% growth in December over the same month of last year.
Similarly, the provincial bureaus reported 0.9% contraction in 11 industries in first six months of the current fiscal year. On a yearly basis, the provincial bureaus reported 2.2% growth in the month of December.
Sectors that posted growth during first half of the year included textile which grew just 0.32%, fertiliser registered growth of 4.9% and non-metallic mineral products which recorded 2.9% growth. The manufacturing of leather products recorded 11% growth, rubber products 1.3%, wood products 46.6% and paper and board 7.9% in the July-December period. Production of food, beverages and tobacco increased 4.3%.
Industries that were producing seven major types of goods recorded a dip in their manufacturing in July-December 2019. Coke and petroleum products production showed 10.3% growth, pharmaceuticals 6.4%, chemicals 4.1%, automobiles 36.4%, iron and steel products 12.3% and electronics 14%. The engineering products registered negative 1.4% growth.