Industrial and services sectors show improvement in the first nine months of fiscal year 2023-24

ISLAMABAD: During the first nine months of the past financial year, the industrial and services sectors showed improvement with each registering a growth of 1.21 percent. The 2023-24 Economic Survey expressed confidence in the future prospects, emphasizing that economic activity is gradually improving, inflation is on a downward trend and the external sector has stabilized.

The Economic Survey 2024 indicated that the manufacturing and mining sectors contributed significantly to GDP growth, accounting for 13.6% in FY 2023-24, with potential for further growth. These sectors grew 2.4% and 4.9%, respectively, during the nine months of the current fiscal year, compared with declines of 5.3% and 3.3% last year.

The manufacturing sector is dominated by large-scale manufacturing (LSM), accounting for 69.3% of the sector and contributing 8.2% of total GDP. Small-scale production and slaughter represent 19.5% and 11.3% of the manufacturing sector, respectively.

For the period July to March 2024, LSM recorded a slight decline of 0.1%, an improvement compared to the decline of 7.0% last year. The textile sector, a major component of LSM, continued to face challenges such as rising production costs, lower export value, competition from China and higher energy tariffs, which led to reduced production. The discontinuation of the export financing program and high interest rates further worsened the situation.

Over the nine months, 11 of LSM’s 22 sectors recorded growth, including food, clothing, leather, wood products, coke and petroleum products, chemicals, pharmaceuticals, rubber products, machinery and equipment, furniture and other manufacturing. Sectors that recorded negative growth included beverages, tobacco, textiles, paper and board, non-metallic mineral products, iron and steel products, metal products, computers, electronic and optical products, electrical equipment, cars and other transportation equipment.

LSM’s results were primarily influenced by unfavorable events in Poland and abroad, supply disruptions and the effects of floods occurring since the beginning of the current financial year. LSM contributed significantly to exports, accounting for approximately 71%. and employing 14.9 percent. labor force.

“This highlights the potential for further growth and development of the sector, instilling confidence in the future of Pakistan’s economy,” the economic survey noted.

The services sector also recorded positive growth of 1.21 percent, reversing last year’s slight negative growth of 0.01 percent. For several years now, the services sector has had the largest share in GDP, amounting to 58 percent.

The services sub-sectors include wholesale and retail trade, which has a 30.8% share in the services sector and showed a growth of 0.32% in nine months, generating 17.78% of GDP. The transport and warehousing sector, with a 10.53% share in GDP, recorded a growth of 1.19% during July to March 2024. Accommodation and food services activities such as hotels and restaurants showed a growth of 4.10 %, education sector having 10.30%, human health and social welfare sector labor related activities having 6.80% and real estate activities having 5.85%. share in GDP, increased by 3.78%. compared to the previous year.

However, some subsectors recorded declines: information and communication by 3.02%, finance and insurance by 9.64%. and public administration and social security by 5.25 percent.