Connect with us

Business

Big industries output declines for eighth straight month

Published

on

  • Pace of contraction sharpens to 11.59% in February.
  • Both domestic and global factors have contributed to this decline. 
  • Decline is a significant concern for country’s economy.

ISLAMABAD: In an alarming development, the large-scale manufacturing (LSM) sector — which accounts for almost one-fifth of the country’s economic growth — contracted for the eighth consecutive month.

The pace of contraction sharpened to 11.59% in February compared to the same month of last year, data released by the Pakistan Bureau of Statistics (PBS) showed.

This decline is a significant concern for the country’s economy because of the LSM sector’s dismal performance, the gross domestic product (GDP) growth will also suffer a significant blow this fiscal year.

Industrial output witnessed a decline of 5.56% in the first eight months (July-February) of the ongoing fiscal year 2022-23 compared to the same period of the last financial year. Over the previous month (January), LSM output went down by 0.5%.

Both domestic and global factors have contributed to this decline, including high energy costs, rupee devaluation, and the government’s tightening of monetary and fiscal policies. These factors have limited imports due to a lack of dollars, contributing to the negative growth of the sector.

The global economic slowdown has added to the woes of industries in Pakistan, with many businesses scaling back operations or reducing operating hours, while others have shut down their plants. Ongoing economic and political instability in Pakistan has also been linked to the decrease in industrial output by independent political economists.

Uncertainty in the country has led to a decrease in investor confidence, resulting in a slowdown in manufacturing activities as well. 

Moreover, the government’s inability to provide a stable and conducive environment for businesses has further worsened the situation, with investors hesitant to make long-term investments in the country. Combined, these factors have contributed to the ongoing nosedive of the LSM sector, which could impact Pakistan’s overall economic growth.

The LSM sector has witnessed a decline in production from August 2022 to February 2023, the breakdown shows:

  • 0.02% decline in August, 
  • 2.7% decline in September, 
  • 7.63% decline in October, 
  • 6.15% drop in November, 
  • 3.51% decrease in December, 
  • 7.9% contraction in January 2023. 
  • 11.59% decline in February

All major and small sectors’ output contracted in February, including textile, food, coke and petroleum products, chemicals, automobile, pharmaceuticals, cement, fertilisers, iron and steel, furniture, leather products, electrical equipment, and non-metallic mineral products.

To combat soaring inflation, which clocked in at 35.4% in March, the State Bank of Pakistan (SBP) raised the discount rate to 21%. Since July 2021 when inflation was at 7%, the bank has raised the rate by threefold or 1,400 basis points, hindering industrial activities by making bank financing more expensive.

In FY22, Pakistan’s LSM sector grew by 11.7% over FY21, aided by rising global demand and favourable government policies to boost GDP growth, with big industries contributing a significant portion to the economy.

According to the PBS data, on a year-on-year basis, in February the following industries showed a significant decline:

  • Textiles — 19.67%, 
  • Pharmaceuticals — 25.47%, 
  • Food — 2.43%, 
  • Garments — 2.99%, 
  • Non-metallic minerals — 1.33%, 
  • Iron and steel — 9.19%, 
  • Chemicals — 14% (of which chemical products output was up 2.96% while fertiliser was down 25%) 
  • Football output — 17.3% 
  • Machinery and equipment output — 28.45%, 
  • Automobiles — 64%, 
  • Computer, electronics, and optical products — 39.7%; 
  • Furniture — 12.7%, 
  • Cement — 3.4%, 
  • Wood products —74.85%, 
  • Tobacco — 10.6%, 
  • Rubber products — 4.88%,
  • Coke and petroleum products — 6.35%, 
  • Leather products — 1.6%, 
  • Other transport equipment output — 31.2%,  
  • Cotton cloth — 17.7%,
  • Cotton yarn by 30.1%

Output during the July-February fiscal year 2022-23 as compared to the same period of FY22 has increased only in wearing apparel (garments) by 35.5%, leather by 3.85%, furniture by 58.45%, and football by 35.8%.

During these eight months of the ongoing fiscal year, the outputs of the following industries declined:

  • Food output — 1.95%, 
  • Beverages — 6.14%, 
  • Tobacco — 20.4%, 
  • Textiles — 14%, 
  • Wood products — 68.65%, 
  • Paper and board — 3.4%, 
  • Coke and petroleum products — 9.4%, 
  • Pharmaceuticals —22.4%, 
  • Rubber products — 7.3%, 
  • Non-metallic mineral products — 9.1%, 
  • Computer, electronics, and optical products — 25%, 
  • Machinery and equipment — 38.6%, 
  • Automobiles — 38.6%. 
  • Cement — 11.8%, 
  • Iron and steel — 3.9% 
  • Fabricated metal — 12.8%

Business

Changes in the US dollar’s value are directly correlated with variations in gold prices.

Published

on

By

The price of 24-karat gold in Pakistan increased by Rs1500 on Thursday, reaching Rs231,000 per tola. This was another jump in the price of gold in the country.

Dealers reported a comparable surge in the price of 10 grams of 24-karat gold, which is currently trading at Rs198,045 after rising by Rs1285. In addition, the cost of ten grams of 22-karat gold increased significantly, trading at Rs 181,541.

These fluctuations are strongly correlated with shifts in the US dollar’s value, demonstrating the tight connection between gold prices and exchange rates. This emphasizes how local gold markets are impacted by variables related to the global economy.

At Rs2,580, the price of 24-karat silver remains steady right now. The price of gold increased significantly on a global scale as well, rising by $14 to $2,214 per ounce.

It’s critical to understand that changes in the worldwide market can have a substantial impact on gold prices in Pakistan throughout the day. The gold rates that are offered are obtained from reliable sources, mostly situated in Karachi and Multan.

It is recommended that individuals seek the advice of nearby gold merchants and jewellers for the most precise and current information regarding gold prices.

Continue Reading

Business

Pakistan pledged to finish building the TAPI gas pipeline.

Published

on

By

The minister discussed the importance of the TAPI gas pipeline project for Pakistan’s energy needs during a meeting with Turkmenistan’s ambassador to Pakistan, Atadjan Movlamov.

The Minister was congratulated by Ambassador Movlamov on taking office and his commitment to the project was noted.

Dr. Musadik Malik thanked the ambassador for his kind words, acknowledged the support, and promised to maintain the two nations’ friendship. The intergovernmental commission and working group meetings for the project this year were briefed by Atadjan Movlamov.

He invited the Minister to attend the Turkmenistan Energy Forum, which would take place in Paris the following month.

TAPI undertaking
The project is for the construction of a 1,680-kilometer pipeline with a 56-inch diameter that can carry 3.2 billion cubic feet of gas per day (bcfd) from Turkmenistan through Afghanistan and Pakistan to the border between Pakistan and India.

According to the terms of the TAPI agreement, Afghanistan would receive its portion of 0.5 billion cubic feet of gas per day, while Pakistan and India will each receive 1.325 billion cubic feet of gas per day.

In order to carry out the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project, Pakistan and Turkmenistan inked a cooperative implementation plan in Islamabad on June 4.

Prime Minister Shehbaz Sharif and a delegation from Turkmenistan, led by Minister of Energy and Water Resources Daler Juma’a, were present at the ceremony.

Continue Reading

Business

The price of gold is still rising in Pakistan.

Published

on

By

According to the All Sindh Sarafa Jewellers Association, the cost of 10 grams of 24 karat gold grew by Rs. 86 to Rs. 196,760 from Rs. 196,674, while the cost of 10 grams of 22 carat gold jumped to Rs. 180,363 from Rs. 180,284.

The price of silver per tola and ten grams stayed at Rs. 2,211.93 and Rs. 2,580, respectively.

According to the Association, the price of gold on the global market rose by $7 to $2,200 from $.2,193.

It is important to note that Pakistani and IMF personnel have agreed at the staff level on the second and final review conducted as part of Pakistan’s Stand-By arrangement.

The International Monetary Fund (IMF) and Pakistan have reached a staff-level agreement on the second and final review of Pakistan’s stabilization program, which is supported by the IMF’s US$3 billion (SDR2,250 million) SBA Agreement. This is according to the official statement released by a team led by Nathan Porter.

Continue Reading

Trending