The manufacturing industry in Pakistan, which is responsible for about 20 per cent of the country’s economic growth, has experienced its eighth consecutive month of decline. This is a major cause for concern as it could have negative impacts on the overall economy.

In February, the rate of decline was particularly severe, with a contraction of 11.59 per cent compared to the same period in the previous year, according to data from the Pakistan Bureau of Statistics.

This decline will impact Pakistan’s overall economic growth, with the gross domestic product (GDP) also expected to suffer a significant blow this fiscal year.


The negative growth of the sector is due to both domestic and global factors, including high energy costs, rupee devaluation, and the government’s tightening of monetary and fiscal policies. Industrial output fell by 5.56 per cent in the first eight months (July-February) of the ongoing fiscal year, compared to the same period last year.

The global economic slowdown has further worsened the situation, with many businesses scaling back operations or reducing operating hours, while others have shut down their plants. The LSM sector has witnessed a decline in production from August 2022 to February 2023.

All major and small sectors’ output contracted in February, including textile, food, coke and petroleum products, chemicals, automobile, pharmaceuticals, cement, fertilisers, iron and steel, furniture, leather products, electrical equipment, and non-metallic mineral products.

To combat soaring inflation, the State Bank of Pakistan (SBP) also raised the discount rate to 21 per cent, hindering industrial activities by making bank financing more expensive.