Economy grows 4% in current fiscal year

Published: May 15, 2010

ISLAMABAD: Spearheaded by the services sector, Pakistan’s economy grew by a modest 4 per cent during the current financial year, slightly above the government’s projection, official sources say.

The assessment is based on a working paper of the National Accounts Committee (NAC). The NAC will meet on May 18 to discuss provisional growth figures for the outgoing fiscal year and final figures for the previous two years. The government had earlier estimated that Gross Domestic Product (GDP) growth would remain at three per cent. Later, the projection was revised upward to 3.4 per cent but final figures are a surprise for many.

Independent economists have attributed this extraordinary showing of the GDP to creative accounting as the government has also revised downward the last year’s GDP number. According to provisional figures in the Economic Survey of Pakistan, during the last fiscal year 2008-09 the economy grew by 2 per cent. However, official sources said that the growth number for the last financial year was revised. “Last year the economy grew by 1.2 per cent,” an official said. The number was revised due to less wheat production.

Officials have now calculated wheat production at 23 million tons against earlier estimates of 24 million tons. For the current financial year, the National Accounts Committee’s assessment is based on nine-month output data of various sectors of the economy. Countries like Pakistan need more than a modest growth in order to create jobs. Every year at least three million young people enter the labour market but a modest growth could not create such a number of jobs.

According to provisional estimates of the NAC, the sources said, the agriculture sector’s growth target was missed for the second consecutive year. This year, the agriculture sector grew by 2.2 per cent against the target of 3.8 per cent. The sources said that the target was missed due to less-than-expected growth of major crops and minor crops. “Less rains were one of the main factors,” a source said. The services sector is the engine of growth. It grew by 6.59 per cent against the target of 3.9 per cent. Ironically, the Pakistan People’s Party used to criticise the Shaukat Aziz-led government’s growth model in which the focus was on the services sector at the cost of agriculture and manufacturing.

Independent economists say that instead of focusing on the services sector, the developing countries like Pakistan should give preference to the agriculture and manufacturing sectors, which can create more jobs than the services sector. The manufacturing sector also performed better than last year. The sector grew by 3.54 per cent against the target of 1.8 per cent, the sources said. Large-scale manufacturing also showed a better outcome as compared to last year when the sector contracted by 7.7 per cent. The NAC also revised downward growth rate of the fiscal year 2008-09. Last year, the economy grew by 1.2 per cent.

Last year, the agriculture sector’s contribution to the total national output was slightly over one-fifth. The manufacturing sector’s contribution was 18.2 per cent and the services sector contributed 53.8 per cent to the total GDP. Sources said the government for the second time also revised growth numbers for the fiscal year 2007-08, the last year of Shaukat Aziz government. Provisional growth figure of 2007-08 was 5.5 per cent. Last year, the government revised it downward to 4.1 per cent. “Now the final growth number for 2007-08 is 3.68 per cent,” a source said.

Published in the Express Tribune, May 15th, 2010.

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Reader Comments (3)

  • Fahad Hasan
    May 15, 2010 - 8:53AM

    This is concocted number and the Shaukat Tarin’s planted men wants to show his era as success story. It is ironical that a person with simple local ordinary MBA degree holder was promoted as Principal Economic Adviser and he is paying back in the same unfair coin by tempering with GDP numbers. Who will believe that our economy has staged a turnaround from 1.2 percent to 4.0 percent. The growth from services sector is totally misleading as almost half of the sector is based upon estimations. The government should have a credible Statistical Agency which is not working on the dictates of Finance Ministry.Recommend

  • Dr. Ghulam Murtaza Khuhro
    May 16, 2010 - 9:24AM

    Many a fool in the world still believe in terminology like GDP and Per capita Income for reduction of ‘poverty’ and increasing the standard of living, and Pakistan has more than enough share of such chumps . Our economic base is too small to cater to 176 million population. Our GDP is below $150 billion. What a shame? How much income of an individual in rural areas, slums and low income neighborhoods has increased. How much income of already employed has increased particularly in view of inflation, price hike and changing life requirements? How much volume in terms of tones and bales etc has increased in comparison to increase in population. If anybody has doubts, give a look to official economic survey and compare increase in volume terms and population growth only for last 5-6 years.
    But, unfortunately PowerPoint Presentation etc help such irresponsible experts to conceal the truth.Recommend

  • Meekal Ahmed
    May 16, 2010 - 8:56PM

    Revising figures for an earlier year (or quarter) happens everywhere, even in the advanced economies. It does not have to be a conspiracy all the time. But, no doubt, our national accounts are suspect. In any event, the figure of 4% is an estimate based on nine-month data and an extrapolation of where the economy will end up for the full year. That will be revised too when all the data are in!

    Even the budget for next year will have a base that is no more than an estimate on the revenue side as well as the spending side. There can be large errors in regards to both.

    To me what is significant is that the economy is growing well below its long-term trend or “potential” (about 6.5% p.a.) while inflation is well above its long-term trend (about 6.5% p.a. as well if one excludes the outliers). That needs to be reversed. Recommend

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