ISLAMABAD, 3 March 2003 — Faster than expected industrial growth has started generating stronger hopes for better domestic and foreign business during the current fiscal 2003.
Industrial growth in the first seven months of 2003 — July, 2002 to January 2003, indicate a 7.02 percent growth, up from 4.40 percent in the same period last year, according to the latest official statistics. It is spurring the GDP growth which is now likely to reach a level of 4.6 percent.
Contribution of industrial production, the Economic Committee of the Cabinet (ECC) notes, rose to 18.20 percent in the first seven months, from a range of 14-15 percent in recent years. The larger industrial output is also impacting exports.
Engineering goods, transport requirement, electric fans, and electrical machinery, more significantly, with increase ranging from 20 to 45 percent, have spurred exports. But export of steel pipes recording a 127 percent and general machinery 227 percent increase, stands out prominently.
The industrial growth has brightened the outlook for exports which are now likely to overshoot the annual target of $10.4 billion for 2003. The first seven months of the fiscal have seen exports rising 19 percent compared to the like period of last year — and, achieving 60 percent of the export target as these have already totaled $6.84 billion until the end of January this year. Larger exports have always meant larger imports, too, as a major portion of export goods use imported industrial raw materials and machinery.
In fact, imports already are up 20 percent during the first seven months, compared to the like period of last fiscal.
Significantly, the current seven months have seen non-oil, non-food imports rise 22 percent. Import of capital goods and industrial machinery alone rose 42 percent, pointing to a larger manufacturing activity and industrial output, a government spokesman said after ECC’s review of the economic performance in the first half fiscal 2003.
Among the industrial products, export of the textile group alone rose 19 percent. The increase includes cotton cloth 11 percent, knitwear 34 percent, and towels 14 percent, compared to the like seven-month period of fiscal 2002. Primary commodities’ export was up 25 percent.
Dr. Ishrat Hussain, governor, State Bank of Pakistan (SPB), the central bank reports that larger exports, as well as export of services, has led to improved the current account surplus by $500 million during July-December 2002. As a result, the current account balance improved to $1.7 billion in these six months from $1.288 billion in the like period of last fiscal.
One of the efforts to raise overall industrial output, particularly that of the key textiles sector which contributes between 60 and 70 percent of all exports, is that the government is considering scaling down of customs duties on imported textile machinery. The proposal is likely to be implemented in June this year as part of the national budget for fiscal 2004 that starts July 1. Plans are also afoot to step up manufacture of modern and sophisticated textile machinery domestically. The industry also expects to import a large number of spindles for polyester processing because it will, in future, use 50 percent of this fiber instead of the present 20 percent in textiles.
Farmers are being also advised to grow specific varieties of cotton so they can produce higher quality products. Plans, too, are under way to upgrade the existing textile units so that they can produce high quality goods for the global market place.
