Industrial output fell 3.85% in July

[Naveed Yaseen]

* Slowdown attributed to factors such as rising cost of production, power crisis etc

By Tanveer Ahmed

KARACHI: The country’s industrial output, a major indicator of the economy, fell negative in July - the first month of the current fiscal year.

“It decreased by 3.85 percent as the industrial indices stood at 196.64 during July 2008-09 against 204.52 in the corresponding period of the previous year,” official data indicated on Monday.

The slowdown in the overall economy, particularly in the large scale manufacturing sector, has been dragging the economic indicators down for quite some time and the negative growth in the industrial production reflects the economic meltdown the country is faced with currently, the economists and analysts believed.

The Musharraf-led regime boasted of the turnaround in economy, though a fragile one as time has proven, on the back of various indicators and the foremost of them was the strong growth in large scale manufacturing which peaked to 19.9 percent in the fiscal year 2004-05.

Factors: But it started slowing down gradually as the growth came down to 8.8 percent in 2006-07 from 19.9 percent in 2004-05, which has been attributed to a host of factors such as the rising cost of production, unavailability of raw materials, power crisis that led to the closure of many industrial units - especially in the textile sector - and the impeding new investment.

Economists also identified inadequate investment in the manufacturing sector, as the industry didn’t put in the required investment to enhance their capacity.

For instance, after going through a major BMR programme some four to five years back, textile sector also halted fresh investment due to dimmer prospects for them in the international export market due to lack of competitiveness of the country’s products.

Also, the past year’s high growth in manufacturing sector was driven by a few sectors like cement and auto, thanks to auto financing and huge public spending on infrastructure projects.

Industry analysts foresee further bleak scenario in this sector because of present security threats and law and order situation in the country that tantamount to further pushing the industrial sector to the wall.

It was after a long time that all the components of the industrial production measurement index i.e. OCAC, Ministry of Industries and provincial Bureau of Statistics (BoS) posted negative growth of 5.14 percent, 3.35 percent and 4.38 percent respectively, during the month under review

The break-up shows that in the petroleum sector, production of jet fuel oil declined by 5.56 percent, diesel oil production 39.06 percent, lubricating oil 7.72 percent, LPG 20.66 percent, kerosene oil 3.26 percent, motor spirits 3.64 percent and other petroleum products by 37.01 percent. The high-speed diesel production was up by 5.76 percent during this month.

The cotton yarn production was down by 1.72 percent, cotton cloth 2.73 percent, coke (Pakistan Steel) 2.43 percent, pig iron 11.11 percent, billet/ingots 29.88 percent, buses 20 percent, and jeeps and cars 36.50 percent.

The production of cement was up by 11.10 percent, tractors 10.11 percent, paper and board 11.43 percent, Nitrogen fertilizer 1.83 percent etc.

In the provincial BoS, the production of vegetables ghee was down by 13.77 percent, cooking oil 5.28 percent, wheat and grain milling 6.03 percent, TV sets 20.76 percent, air conditioners 22.91 percent, refrigerators 1.49 percent etc.

The production of blended tea was up by 23.63 percent, starch and its products 14.39 percent, beverages 0.54 percent etc.

http://www.dailytimes.com.pk/default.asp...2008_pg5_3