July 20, 2008

Pakistan may not achieve 10.5% growth target in industrial sector

The Dawn reported that Pakistan is unlikely to achieve its annual 10.5% growth target in the industrial sector during the current financial year following the sector's decline in output by more than 4% in December 2007 for the first time in the recorded history.

According to Federal Bureau of Statistics data, the recession in manufacturing production was witnessed in December 2007, when it declined by 4.12% YoY over December 2006. The worst energy crisis, reduced working days on the back of strikes in the wake of assassination of former prime minister Ms Benazir Bhutto, have been considered the sole factors for this slump in production.

Analysts said that the negative growth in industrial production in December 2007 dampened the chances of any reverse in industrial growth in the months ahead to achieve the 10.5% growth target. Industrial growth, as measured by quantum index numbers, showed that all major sectors like manufacturing, mining and electricity registered a slide in production growth. This also resulted into further widening the gulf between demand and supply issue.

The growth in industrial production had been steadily on decline for the last three years as it declined to 8.8% in the year 2006-07 from 19.9% in the year 2004-05 owing to capacity constraints and closure of many units as a result of high cost of doing business in Pakistan.