Let’s dive into #manufacturing and understand how #Pakistan has lagged its #Asian peers in #industrialization, how stagnant growth turned to a decline even #precovid and how #financing has been unable to encourage #investments in the sector macropakistani.com/2020/07/manufa… (1/n)
#Industrial value add per worker in Pakistan has seen minor improvements in the last 25 years. While it changed by 12% for Pak, it changed by 512% for #China. Unfair comparison so not even on the chart but #India has doubled its #Productivity too… (2/n) 
What’s worse is that post 2018, manufacturing in Pakistan has been on the decline, specifically Large Scale Manufacturing which makes up the bulk. Major reasons cited are PKR #devaluation, rising #energy costs and higher #taxes... (3/n)
Each sub-sector has its own issues but #petroleum, #auto and #electronics have been hardest hit recently. Should also note that even though #textile and food/bev have had lower declines, they make up largest portion of LSM and hence even small declines have major impacts. (4/n)
@WorldBankSAsia has also identified how ‘public investment in key infrastructure and human capital must increase’ blogs.worldbank.org/endpovertyinso….... (5/n)
However, #investment in manufacturing has been sluggish, with the public sector assuming no responsibility and the private sector focusing their energies on low-tech #agriculture and #housing. (6/n)
This is despite manufacturing taking up the bulk of #financing in Pakistan. Financing is typically required to improve investment returns so question should be where are manufacturing sector loans going if not investment? (7/n)
These loans are typically to serve the short-term cash needs of businesses (working capital) and not for long-term fixed investments. Investment in Pakistan is lagging behind because businesses are already cash strapped to pay for their short-term needs. (8/n)
High interest rates cannot be the issue since @StateBank_Pak has offered long-term financing for export-oriented industries was available at subsidized rates for the last few years. Below numbers for Jan 2020 (n/n)
