February 2020: Factory output at 7-month high

The country’s industrial output growth rose to a seven-month high in February, led by a robust expansion in mining, manufacturing and electricity. But the Covid-19 pandemic and the 21-day lockdown to stall the spread is expected to have a sharp impact on the sector in the months ahead.

The index of industrial production rose by an annual 4.5% in February, higher than the upwardly 2.1% growth registered in the previous month and 0.2% in the same month last year. Cumulative growth in April-February rose 0.9% compared with 4% growth in the year earlier period.

The major push came from mining and electricity sectors, which posted 10% and 8.1% growth respectively, while the manufacturing sector rose 3.2% in February from a contraction of 0.3% in the same month last year. The capital goods and consumer durables sectors contracted during the month, suggesting sluggish investment and consumption demand, which has been persisting for a while. In terms of industries, 13 out of the 23 industry groups in the manufacturing sector have shown positive growth in February 2020 as compared to the corresponding month of the last year.

Economists expect the sector to be pummelled by the impact of Covid-19 pandemic. Already several economists, research houses, multilateral agencies have forecast growth to plunge to between 1.6% to 2.5% in 2020-2021 as the domestic and global economy has gone into a freeze due to the lockdown ordered across the globe to tame the spread of the disease.

No comments: