KARACHI:
Pakistan’s large-scale manufacturing (LSM) sector ended fiscal year 2024-25 on a weak note, contracting by 0.74% compared with the previous year, according to provisional data released by the Pakistan Bureau of Statistics (PBS).
The Quantum Index of Manufacturing (QIM) for June 2025 stood at 112.95, which reflected a modest 4.14% year-on-year growth but also a steep monthly fall of 3.67% from May.
“Overall, the Large-Scale Manufacturing Sector has shown a growth of -0.74% during July-June 2024-25 when compared with the same period of last year,” noted PBS.
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The LSM, which notes the growth of the industry in the country and contributes around 8% to the national GDP, contracted by 0.03% in fiscal year 2024, following a growth of 0.92% in the preceding year.
On a cumulative basis, the QIM averaged 114.82 during July-June 2024-25, lower than 115.67 recorded in the corresponding period of 2023-24, highlighting subdued momentum in the industrial economy.
The contraction was primarily driven by steep declines in cement, iron and steel, non-metallic mineral products, electrical equipment, machinery, and furniture. The cement sector shrank by 4.52% over the year, while iron and steel products fell 8.71%.
Similarly, production of non-metallic mineral products dropped 7.86%, electrical equipment 11.65%, machinery and equipment 35.46%, and furniture plunged by a sharp 56.26%. The food sector, which carries significant weight in the index, also contracted 3.97%, further dragging down overall performance. Chemicals and fabricated metal products recorded similar negative growth, compounding pressures on the sector.
Despite the broad-based weakness, certain industries managed to post strong gains, providing some relief. Automobile production surged by an impressive 46.15% during the fiscal year, benefiting from renewed demand and improved supply chain conditions.
Petroleum products rose 11.92%, reflecting higher refinery output. Garments grew 5.70%, while fertilisers and pharmaceuticals expanded by 1.69% and 2.97%, respectively. Textiles, the backbone of Pakistan’s export sector, showed mixed results; cotton yarn and garments recorded gains, yet overall textile output fell slightly by 0.85%. Beverages and tobacco also managed recoveries after consecutive years of contraction.
“Notable improvement has been witnessed in many pivotal sectors in recent months,” said Waqas Ghani Kukaswadia, Research Head of JS Global.
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Declining inflation supported LSM growth by lowering input costs and strengthening demand, he added. “I believe that easing in outgoing months has improved the growth outlook for the large-scale manufacturing sector.”
“LSMI growth signals industrial recovery, boosting employment, exports, and government revenues,” said Ali Najib, Deputy Head of Trading at Arif Habib Ltd.
Strong performance in automobiles and apparel supports demand and investment, while declines in machinery, minerals, and furniture highlight structural weaknesses that could restrain sustainable economic momentum.
“In my opinion, outlook remains cautiously optimistic, but persistent weakness in machinery and construction-linked sectors may hinder broad-based, sustainable industrial recovery, as indicated by LSMI numbers,” Najib told The Express Tribune.
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The mixed trends in the LSM sector point to uneven growth and persistent structural weaknesses. While consumer-driven sectors like automobiles and garments showed resilience, industries linked with construction and heavy manufacturing remained under severe stress, reflecting subdued domestic demand and rising input costs.
Energy shortages, higher financing expenses, and weak investor confidence have further constrained industrial expansion. Analysts caution that without targeted policy support, energy sector reforms, and incentives to boost exports, Pakistan’s manufacturing base will continue to struggle, limiting job creation and undermining the country’s broader economic recovery.