Industrial sector woes continue; IIP falls 24% in November

The country’s industrial production activities have continued to sputter, mirroring the manufacturing sector contraction repeatedly reflected by the Purchasing Managers’ Index.
Index of Industrial Production (IIP), a more concentrated industrial activity measure showed that the industrial production had declined in November reflecting continuous weakness in the sector which has been struggling to come out of the economic crisis. 

IIP fell by 2.2 percent in November from the previous month while the index measured on an annual basis was down 23.9 percent from a year earlier levels to 106.8 index points. 
The sector is also confronted with the softening global economic outlook which could moderate the demand conditions for the locally-made products. 

The local demand conditions are undermined substantially by runaway prices and the exorbitant interest rates which brought into to restrain such prices. 

Taxes which are hitting the wallets of consumers are also taking a massive toll on the corporate balance sheets as companies complain of further pain in their sales. 
Measured on an annual basis, the production of food products slumped 25.0 percent while the beverage production was up 7.1 percent. 

Both textiles and apparel production fell 56.2 percent and 8.7 percent respectively reflecting the softening foreign demand from key customers in the West. 
Meanwhile, tobacco production increased by 18.8 percent. 

Further, the manufacturing of coke and refined petroleum products cratered by 94.9 percent while rubber and plastic products fell by 18.7 percent from a year ago. Nearly all categories of industrial products except beverages and tobacco lost ground in November 2022 from a year ago levels. 

The difficulties in accessing imported intermediate goods may have also added to the woes of the manufacturers due to the foreign exchange crunch.

An early deal with the International Monetary Fund could alleviate pressure on these manufacturers, but the softening demand conditions could add fresh troubles for local manufacturers in scaling up. 

But, China’s re-opening and the potential softening of commodities prices on the hopes of a modest recession in both the US and Europe could offset some of the pressures faced by manufacturers.