Islamabad:
The increase in Pakistan’s most important industries – the biggest tax and employment contributors – shrunk almost 2% in the first half of the current year, indicating the adverse effects of the high cost of business and economic stabilization.
The large-scale construction sector (LSM) recorded a negative increase of 1.9% in the period July December 2024-25 compared to the same period last year, the Pakistan Statistics Office (PBS) said on Thursday.
This is the third consecutive year, when large industries face a contraction due to the government’s policies to avoid dominant deficiency.
The interest rate has been reduced by 10 percentage points, but it will take time before businesses begin to borrow. The prevailing policy, security and economic instability also affects the investment climate.
The 1.9% LSM contraction is also in line with total low economic growth. Pakistan’s gross domestic product (GDP) increased by only 0.9% in the first quarter of FY25. The country has been in the process of economic stabilization since June 2023, which has affected almost every household and industry.
However, the government has not yet been able to bring fundamental changes to the structure of the economy and has not ended the anti-export prejudice from its policies.
The latest budget adversely influenced the official sectors of the economy when the government put an excessive burden on those who are already paying more than their capacity. The high cost of electricity and gas are other obstacles to the country’s economic growth.
Industries such as food, oil products, chemicals, minerals, iron and steel, furniture and machinery faced negative growth during the first half of current use.
The situation was also gloomy only in December 2024. The large -scale industries recorded a 3.7% contraction per month during the same period last year, according to PBS. Sugar production was lower by 13% in December compared to the same month of the previous year. Iron and steel production decreased more than 11% while cement production decreased by 5.5%.
The government had given a reduction package of winter electricity invoices to both industrial and home consumers. But the package did not help much and electricity production was reduced by 2% in January.
Production increased to H1 for industries such as tobacco, textile product, clothes, car and transport equipment. However, there was a sharp decline in food products, cokes and oil, chemicals, non -metal mineral products, iron and steel products, electrical equipment, machinery and equipment and furniture.
PBS has announced production numbers at a time when the government is facing pressure to abandon the course of economic stabilization and let the economy grow. However, discussions focus on areas such as real estate, which have no substantial contribution to economic growth.
The food sector is largely influenced by the government’s decision to impose 18% on sales on packaged milk, liquid and dust. This, in turn, has reduced packaged milk sales by 20% in the first half, affecting both farmers and the milk processing industry.
Pakistan’s industries are largely dependent on the imported raw material for the production of finished products. The government had kept a tight lid on imports, which was relaxed in December. The relaxation immediately led to a monthly import bill of about $ 5.5 billion that has begun to affect the position of the external account.
Rupia also comes under pressure and members of the Financial Council on Wednesday urged Prime Minister Shehbaz Sharif to let Rupia gain his market value to keep exports competitive.
However, the dilemma of the industry is that it has a very limited technological advantage and export surplus and is mainly based on a weak rupee to remain profitable.
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