Manufacturing Sector Chapter 21: Manufacturing Sector The manufacturing sector plays a leading role in accelerating the pace of economic growth in Pakistan. For example, the GDP growth rate reached a peak in 2004-05 of over 9 percent. More than half of this was due directly or indirectly to the extremely high growth rate of the manufacturing sector of over 18 percent. Also, when the manufacturing sector performs poorly the GDP growth rate tends to be low. During 2018-19 and 2019-20 output of the sector fell by 8 percent. Consequently, the GDP growth rate in the former year was only 2.1 percent and actually negative by 0.5 percent in the latter year. Given the importance of the manufacturing sector in the process of growth, one of the key targets in the Charter of the Economy is to raise the growth rate of the sector to 8 percent by 2024-25. This will contribute to the achievement of the target GDP growth rate of 6 percent. 21.1. Characteristics of The Sector The manufacturing sector consists of three sub-sectors, viz., large-scale manufacturing, small-scale manufacturing and slaughtering. The combined contribution to the GDP is 12.5 percent, with individual shares of 9.5 percent, 2 percent and 1 percent respectively. The growth rate of the manufacturing sector has been systematically on the decline since 2004-05, as shown in Table 21.1 below. This continuing fall in the sectoral growth rate can be considered as one of the major structural problems that the country faces today. Fortunately the year, 2020-21, has witnessed a recovery by the sector with a growth rate approaching 9 percent, due to the depressed output in 2019-20 after COVID-19. Table 21.1: Average Annual Growth Rate of The Manufacturing Sector Large-Scale Small-Scale Slaughtering 1999-2000 to 2004-05 12.0 7.5 3.9 2004-05 to 2009-10 4.0 8.5 3.5 2009-10 to 2014-15 3.2 8.3 3.5 2014-15 to 2019-20 0.7 6.8 3.6 2020-21(up to April) 9.3 8.3 3.9 Source: PES (%) Total 10.9 4.3 3.8 1.7 8.7 201