Pakistan’s Large Scale Manufacturing increased by 22% YoY during Mar’21 on the back of recovery in economic activity and a low base taking 9MFY21 growth to 9.0% YoY.

Growth on YoY basis was seen in Textile segment (↑40.4%), Coke & Petroleum (↑76.9%), Pharmaceuticals (↑16.1%), Chemicals (↑26.4%), Non Metallic Minerals (↑56.4%), Autos (↑123.3%) Fertilizers (↑6.0%), Paper & Board (↑2.6%), Electronics (↑26.7%), Wood (↑186.5%), Engineering (↑22.7%) and Iron & Steel (↑31.5%). Whereas YoY declines were observed in Food Beverage & Tobacco (↓16.2%), Leather (↓16.7%) and Rubber (↓30.4%).

Petroleum production increased by 77% YoY due to Petrol/Diesel production increasing by 85/119% YoY. This was mostly due to low base effect given lockdown last year and higher utilization rates of refineries given recovery in domestic demand. NMM jumped by 56.4% YoY due to 57.2% YoY rise in cement production. As domestic dispatches increased by 62.3/38.5% YoY in South/North markets primarily because of low base effect and robust domestic demand on the back of extension in incentives for construction sector announced by the Gov’t.

Cars production marked a significant growth of 123% YoY on the back of 183.5% YoY growth in Jeeps and Cars. Improving macro indicators along with low auto financing cost would keep demand strong and allow the sector to grow going forward.

Textile, Electronics, Pharmaceuticals and Chemical also increased

Textile sector grew by 40.4% YoY on the back of a 30.4% YoY increase in exports during Mar’21 due to low base effect. Electronics production increased by 26.7% YoY due to incline in refrigerators/deepfreezers/air conditioners/electric fans/electric meters by 111.8/101.1/171.6/83.4/142.2% YoY given low base effect. We expect arrival of summer would result in further increase in sales of consumer electronics.

Pharmaceuticals grew by 16.1% YoY given 37.8/30.1/13.1% YoY increase in Syrups/Capsules/Injections. The growth was largely due to low base effect. Chemicals increased by 26.4% YoY due to paints (solid)/hydrochloric acid/sulphuric acid inclining by 76.3/21.6/94.0% YoY. We expect the sector to report growth going forward on the back of continuation of industrial and construction activity.

FBT and Leather declined

FBT declined by 16.2% YoY due to 13.1% YoY fall in starch and its products. Whereas (1) soft drinks increased by 28.6% YoY and (2) wheat & grain milling increased by 15.0% YoY due to govt channeling wheat to millers to meet demand shortfall. Leather products fell by 16.7% YoY due to 33.3% YoY decline in footwear. This is attributed to lingering effects of COVID lockdowns in export markets.

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