Pakistan has made economic history by launching its first-ever Purchasing Managers’ Index (PMI), an index designed to track the performance of the country’s manufacturing sector.
The initiative is a collaboration between HBL and S&P Global, and its aim is to provide real-time economic activity information to inform policymakers, businesses, and investors.
The PMI is a commonly used economic indicator globally, measuring levels of production, new orders, employment levels, supplier delivery times, and inventories. It is considered a leading indicator of economic prosperity, and it provides an early warning of economic booms or busts.
For Pakistan, a lack of reliable industrial data has been a hindrance to economic planning for years. The arrival of the PMI is likely to improve transparency, attract foreign investors, and allow the government to formulate better policies for industrial growth.
According to analysts, the availability of a standardized index will build confidence in the economic data in Pakistan, which is largely criticized for inconsistency.
The PMI will also help businesses in reshaping production plans based on market forces and provide a better idea of the contribution of the manufacturing sector to GDP.
While the project is being welcomed with applause by economists, there are some issues that continue to persist. Pakistan’s manufacturing sector is plagued by issues such as power outages, erratic policies, and global economic fluctuations.
The success of the PMI will depend on how the government and the private sector make the best use of the data in driving meaningful reforms.
By doing so, Pakistan is following other countries using sophisticated economic tracking systems, marking the country is moving towards more evidence-based policymaking.
