Production of electrical goods shrinks 13pc

KARACHI: Production of electrical products witnessed a steep fall of over 13 per cent during the first four months of FY24 due to the high cost of manufacturing and the sharp increase in electricity prices.

Out of 10, nine electrical products posted negative growth during July-October 2023-24 while others were already on the negative list of production in the previous fiscal year.

The FY23 witnessed negative LSM growth of 10.28pc against an expansion of 11.7pc in FY22. This was an extremely serious issue since the LSM reduced from positive to negative growth showing a cumulative fall in the LSM growth by 21.98pc.

The manufacturing of electrical equipment fell by 13.3pc during 4MFY24 against negative growth of 2.2pc in the same period last year.

High inflation, sharp rise in power prices hamper buying capacity of middle class

The details showed that most of these electrical products were used by middle and lower-middle-income households. However, 29.2pc inflation in FY23 eroded the purchasing power of the middle and lower middle class. Unlike India and Bangladesh middle class in Pakistan has been vanishing instead of increasing in numbers.

The manufacturing of refrigerators shrank 13.3pc during the 4MFY24. However, it was much lower than a massive contraction of 38.4pc recorded in July-October FY23.

The overall 10.28pc LSM fall in FY23 was visible in the entire sectors of production but the volume of negative growth was much higher in manufacturing and particularly in electrical equipment. This negative growth continued in FY24 as October alone noted 4.1pc negative LSM growth.

The LSM is the largest provider of employment. The economic growth rate in FY23 was negative which eradicated any chance for job creation despite 40pc population living below the poverty line. The negative growth trend in LSM during the first four months of FY24 is a clear sign that the economy will not grow at a projected rate of 2-3pc in FY24. Pakistan needs a 6pc economic growth rate to meet the job demand at the minimum level. The large-scale unemployment resulted in vast outflows of youth from Pakistan. At least one million left this country in FY23.