LSMI shrinks 2.2% MoM in October

December 16, 2024 (MLN): The large-scale manufacturing Index (LSMI) sector of Pakistan recorded a drop of 2.2% MoM in October 2024 to 109.10 compared to September's 111.60 points, the Pakistan Bureau of Statistics (PBS) reported Monday.

On a year-on-year basis, the sector's growth remained steady, but during the first four months of FY2024-25, LSMI contracted by 0.6% YoY. 

Industry accounts for about 18% of Pakistan's total GDP at producer prices. Data on industrial production in Pakistan is not available on a high-frequency basis, as GDP figures are officially released quarterly with at least a two-month lag..

As a proxy for industrial production, policymakers in Pakistan rely on Large Scale Manufacturing (LSM), which is a sub-component of total industrial production. The performance of LSM is a key indicator of the overall health of the industrial sector and is assessed monthly through the Quantum Index of Large-Scale Manufacturing Industries (QIM).

Historically, LSM dominates the manufacturing sector of GDP, accounting for around 69% of manufacturing — a sub-component of Industry — and about 8% of the overall GDP.

Economic activity began to rebound in the second half of FY24. However, global demand slump, currency devaluation, and a widening current account deficit severely limited the government's flexibility, particularly in maintaining fiscal discipline amidst stringent financial conditions.

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