ISLAMABAD, Oct 25: Pakistan’s industrial output declined by around five per cent in the first two months of the current fiscal year in the wake of international financial crisis, sending fears of massive layoffs, particularly in the electronic industries, officials told Dawn on Saturday.

Pakistan’s economy has not yet felt fully the consequences of the global crisis at this juncture, and it is hard to estimate their severity and duration, but some impact has already been obvious, like slumping in the industrial production and steady decrease in dwindling forex reserves.

Many sub-sectors of the large-scale manufacturing did not perform well during July-August, particularly electronic goods, indicating that the 6.1 per cent LSM growth target set for 2008-09 is unlikely to be achieved.

An official said textile sector is labour intensive and any drop in production or exports is signaling massive layoffs, particularly those people who are working on daily wages to feed the families.

Data compiled by the federal bureau of statistics showed that production of cotton yarn declined by 0.82 pc, cotton cloth 1.33 pc and power-looms 54.13 per cent during the first two months of the current fiscal year over last year.

Among the electrical production, refrigerators recorded a negative growth of 2.60 pc, deep-freezers 26.32pc, air-conditioners 6.39pc, electric bulbs 20.97pc, electric tubes 9.21 pc, electric motors 37.48pc, electric meters 27.60pc, switch gears 17.61pc, electric transformers 14.80pc, TV sets 5.06pc and bicycles 20.95 pc during the period under review.

Analysts said industrial production has been adversely affected by the crisis through both price effects that increase the cost of production and income effects that decrease the demand for products in the markets.

The sever power shortage and highest-ever increase in energy prices also further fuel the crisis, which led to cuts in production, particularly in the textile based industries resulting into lower exports.

It is believed that the trend indicates a declining move for the current fiscal, amid growing concern over the de-industrialisation trap. And the current declining trend or a flat rate of growth is the forecast for the next fiscal year.

Iron and steel production declined by 0.84pc, pig iron 10.35pc, billets 32.85 pc and HR sheets 12.44pc during July-Aug over the same period last year. However, billets production declined by 4.97pc.

In the automobile sector, production of busses declined by 39.35 pc, jeeps and cars 43.91 pc and motorcycles 4.40 pc, respectively during the period under review. These sectors and associated vendors also provide scores of jobs.

An official in the industry ministry said it is not clear how large and widespread the impact is. But it is believed that some industries might get benefit from the crisis, particularly those using domestic raw material.

But to avoid losses, some factories will have to increase their production prices which would ultimately lead to lesser sales, the official added.

The industrial growth had been shrinking for the last three years as it grew by 5.4 per cent in the year 2007-08 down from 19.9 pc growth recorded in the year 2004-05 owing to capacity constraints and high cost of doing business that resulted into closure of many units.

As a result of decline in industrial output, the import bill of consumer and electronic goods swelled during the period under review.

The slump in the industrial growth had greatly affected the export of commodities, particularly the textile and clothing exports which already declined from the start of the current fiscal.