The sharp drop in March 2023 large scale manufacturing LSM output dampened hopes for a positive growth rate for Pakistani economy, and the provisional growth figure for the preceding fiscal year is looking increasingly likely to remain negative.
A huge contraction in the LSM to negative territory indicates that economic activity would come to a halt, inflation will rise, and unemployment will rise if the IMF program is not revived.
The updated estimates from the Ministry of Finance indicated a positive GDP growth rate of 0.8%, however the most recent numbers from LSM for March 2023 show that the rate was still negative by 25% when compared to March of the previous year. The drop was the greatest since the Covid-19 epidemic. The LSM shrank by 8.1% from July to March, the first nine months of the current fiscal year.
The updates about Pakistan’s economy were briefed
“Taking into account the results of the industrial and agricultural sectors, the preliminary growth rate might go as low as minus one (-1) percent. Top government sources confirmed to The News on Monday that work was ongoing to change the preliminary figure into a positive range of 0 to 0.5 percent.
Within this week’s meeting, the National Accounts Committee (NAC) will convene to determine the preliminary growth figures for the preceding fiscal year 2022-23.
Dr. Khaqan Najeeb, a former advisor to the Ministry of Finance, indicated that the inability of the industrial sector to obtain letter of credits was due to the shortage of dollars in the country. The 8.11 percent drop in LSMI output from July 2022 to March 2023 is just one indicator of how much the absence of import access has affected industrial production in Pakistan.
He said that if the programme had been maintained with the IMF, multilateral, bilateral, and commercial cash would have flowed in to relieve imports and unblock economic activity.
Due to expected declines in the manufacturing and agricultural sectors, Pakistan’s GDP is expected to grow slowly in FY23. He argued that this would lead to increased unemployment and inflation as a result of a lack of available resources.
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