LSM shows resistance despite hurdles

Despite the current problems faced in the economy, including severe energy crisis, high input costs and fluctuating domestic and international demands, LSM has managed an overall growth of 2.07 percent over the period July to October 2011 compared with the same period of last year. According to the Federal Bureau of Statistics (FBS), the overall Quantum Index Number (QIN) of LSM industries after the four months of the ongoing fiscal year was 104.16 points, compared to 102.05 points in the same period of last year. Of the three sources used for the computation of the QIN, BOS showed maximum growth of 2.15 percent for the July-October period this year compared with the same period of last year, followed by MOI (growth of 0.50 percent) and the OCAC group (0.41 percent). Although the LSM index for October 2011 fell by 1.47 percent compared to the same period of last year, yet it showed month-on-month improvement of 4.68 percent. Given this trend continues its current performance; it seems that the government may be successful in achieving its current growth target of 3.6 percent in the FY12. It calls for well planned action by the authorities to make sure the economy continues to flourish. Unfortunately, cost of doing business in Pakistan, which has been one of the main impediments of industrial production, has increased over the years, reflecting in the lower overall index number in October. Gas outage, which has become more frequent with the advent of winter season, is another factor hurting the economic performance of industries. It has affected the fertiliser production, which fell by 24.09 percent in the month of October this year, compared with the same period of last year. The main head in the LSM basket is the textile sector, with an adjusted weight of 32.6 percent, which has experienced a steady growth over time. Cotton yarn and cotton cloth increased by 1.52 and 1.11 percent, respectively, over the first four months of FY12 compared with the same period of last year. Knitting wool, however, showed a decline of 3.93 percent over the same period. Production of some sectors reflect the ongoing power crisis in the country, including coke and petrol, whereas other like leather and pharmaceutical groups have contributed positively towards the index. Consumerism in packaged food, which has an adjusted weight of 19.10 percent in the LSM basket, is thriving as can be seen by the increases in the production of juices, syrups and squashes, which have shown an increase of 42.5 percent over the period July to October 2011 compared with the same period of last year. Energy issues coupled with the inefficient running of Pakistan Steel Mills have impacted the steel products, which have experienced a decline in all related commodities (coke, pig iron, billets, etc). A simultaneous decline in the chemicals production reflects on the slowdown of construction and economic activity in the country. Although there has been an improvement in the index since the start of the current fiscal year, even then uninterrupted energy supply can further boost this number. It is about time the authorities realise the importance of the provision of such faculties to ensure the survival of the countrys crippling economy.