Karachi, August 17, 2021 (PPI-OT): LSM growth jumps by 14.85% YoY in FY21

Large-scale manufacturing (LSM) grew by 18.42% during Jun-21 taking FY21 LSM growth to 14.85% YoY. This remarkable rise in LSM during the fiscal year was expected, as mentioned in our previous reports, given slowed industrial activity during FY20 amid strict lockdowns during the first wave of COVID-19.

Most of the major categories of LSM witnessed strong growth in FY21. Autos showed the most growth followed by Non-metallic minerals and Chemicals which grew by 51.06% YoY, 26.66% and 19.19%, respectively.

Extraordinary recovery was also seen in Coke and petroleum products (18.05% YoY) and Iron and steel products (15.58% YoY).

Textile sector grew by 15.31% YoY during FY21. The sector was the biggest contributor as it has the most weight in the index. We believe the sector will continue its growth trajectory owing to strong demand supplemented with favorable government policies to boost exports.

Categories which witnessed deterioration during the year were the ones with significantly lower weight in the LSM index, such as Wood, Leather, Engineering and Rubber products.

Given the substantial growth in LSM during FY21, we expect FY21 GDP growth to be revise upward to ~4.5%.