Reverting to old base year: Economy grows by 3.67% this year, but misses target

Published: May 9, 2012

Growth is around 1% higher than previous estimate of 2.8%.

ISLAMABAD: 

The economy grew by 3.67% this year, missing even the revised growth target despite government’s efforts to keep the economy at a higher level by sticking to the old base year for calculations.

For yet another year, the targets for agriculture, services and large-scale manufacturing were missed while the industrial growth target was achieved. Provisional gross domestic product (GDP), figured out on the basis of 1999-00 as base year, was approved in the 92nd meeting of the National Accounts Committee, headed by Statistics Secretary Sohail Ahmad, here on Tuesday.

Pakistan needs an annual growth of 7% to 8% to create jobs for new entrants in the market. Anything below this benchmark leads to an increase in unemployment and increase in poverty, according to the Planning Commission.

However, there were improvements as compared to the results of last year. In some sectors, the results seemed to be encouraging despite the fact that many industries remained shut due to the energy crisis and investment was not picking up because of political instability, shortage of working capital and security concerns.

The latest estimates are based on provisional information up to nine months, which is used to make projections for the entire year. Net national income grew by Rs213 billion, according to NAC documents.

The 3.67% growth was almost one percentage point higher than the figure approved earlier by NAC in its 91st meeting held on April 26. In this meeting, NAC also revised the calculation methodology and changed the base year from 1999-00 to 2005-06.

However, economic managers did not accept both the rebasing of the economy and 2.8% growth rate with revised base year of 2005-06, compelling the statisticians to go back to drawing boards.

For the current financial year ending June 30, the government had originally set a 4.2% growth target that was revised downward to 4% after last summer floods in Sindh.

NAC also revised last fiscal year’s growth figure, putting it at 3.04% against earlier assessment of 2.4%. “Had there been no revision of last year’s growth, the GDP would have grown by 4.2% this year due to a low base effect,” said Sohail Ahmad while talking to The Express Tribune.

However, the revision of last year’s growth is not unusual as it is a normal practice to revise the figures of the last two years on the basis of final data.

Agriculture

The government missed the 3.4% agricultural growth target as the sector grew by 3.13%. Last year, the growth was 2.4%.

Though the targets for major crops and livestock were achieved, minor crops and fishery targets were missed. Against the target of 3%, major crops rose by 3.2% against 0.3% contraction last year. Minor crops contracted by 1.3% against the growth target of 2%. Last year, minor crops grew by 2.7%.

The 4% growth target for livestock was achieved. Last year too, it grew at almost the same pace.

Industries

The government surpassed the industrial sector growth target of 3.1% as the sector grew by 3.4%. Last year, the growth was only 0.72%. Mining and quarrying sector grew by 4.4%, much more than the target of 1%.

The manufacturing sector grew by 3.5% against the target of 3.7%. Last year, it grew by 3.1%. In the manufacturing sector, large-scale manufacturing rose by 1.78% against a 2% target. The electricity, gas and water supply sector contracted for the third consecutive year and it saw a negative growth of 1.6%. The growth target was 1%.

Services

The government missed the services sector growth target of 5% as the biggest component of the economy grew by 4.1%. However, the decision to keep the old base year helped achieve growth targets in sub-sectors of the services sector.

According to fresh results, finance and insurance sub-sector rose by 6.6% against the target of 0.2%. Last year, the sector had contracted by 1.4%. The rebasing led to an 11% contraction in this sector.

The 4.5% growth target for the transport and communications sector was missed as it grew by 1.3% while wholesale and retail trade grew by 3.6% against the target of 5%. The public administration and defense sector grew by only 2.6% against the target of 6%.

Published in The Express Tribune, May 9th, 2012.

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Reader Comments (19)

  • Lateef Khan
    May 9, 2012 - 5:25AM

    Its not very good but still we are better than Greece, Spain, Portugal and many other countries that are in double dip recession.
    .
    We achieved this growth despite biggest disasters in the human history (floods etc).

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  • Knotty
    May 9, 2012 - 5:26AM

    Lets hope our jealous friends remember ‘Aman ki Asha’ and don’t wish bad for us in comments section!!!!

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  • Yasin
    May 9, 2012 - 8:37AM

    Finally an achievement of PPP govt. The growth in industrial sector is encouraging. However its quite a disappointment to know that unless economy grow at a rate of 6% to 7%, no new jobs etc. The manifesto of PPP “Roti, Kapra aur Makan” needs a serious reconsideration.

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  • khan
    May 9, 2012 - 10:13AM

    Pakistan has many times in past fudged numbers in own reports as well as to international donors whose money we enjoy. These numbers have a high chance of being fudged ones before budget, just to make sure the balance sheet looks good so that we can beg for more money.

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  • JS
    May 9, 2012 - 11:05AM

    All these numbers are lies and meant to mislead….just like the entire history of this country (as told by our textbooks, scholars, ptv, intellectuals etc) is also a lie. Not only have we murdered our history, we are now in the process of ensuring there is no hope for a future either.

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  • Arif
    May 9, 2012 - 11:23AM

    @Lateef Khan

    Greece, Spain, Portugal are already developed countries. No one lives below poverty line there whereas half of Pakistanis live below poverty line. Those countries have 99% literacy rate whereas half of Pakistanis are illiterates.

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  • Meekal Ahmed
    May 9, 2012 - 1:46PM

    @Arif:
    I don’t think a half of the people live below the poverty line. Please don’t make rash statements.

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  • Umair
    May 9, 2012 - 3:29PM

    @Meekal: Depends on what definition of poverty line you use. $1 or $2 per day.

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  • Haris
    May 9, 2012 - 3:58PM

    @Arif: Please tell me this is a joke. The aforementioned countries have no poverty there hahaha please get out of the bubble you are living in and as for 99% literacy I’ll let people judge your own stupidity

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  • Haris
    May 9, 2012 - 3:59PM

    @JS: And how do we know your comment isn’t a lie?

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  • Ameer
    May 9, 2012 - 5:00PM

    @Knotty:
    Jealous of what??? There are many emotions that Pakistan can bring out in others but jealously is not one of them..Maybe pity is the right word..
    If you guys can be so arrogant with just 3.67%growth, can’t imagine how you would behave if Pakistan’s economy did good..

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  • Arif
    May 9, 2012 - 6:42PM

    @Haris

    Read my previous comment again. I said poverty line, not poverty. Big difference. And google for those countries’ literacy rates. They are either 99% or 100%.Recommend

  • Good decision
    May 9, 2012 - 7:02PM

    @Haris: JS is truly lying by 85% but NAC and Financial office have been proved 100% wrong. I bet on 85%.

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  • rameez
    May 9, 2012 - 7:13PM

    Well its a start lets hope next year we can achieve 5% growth .. However as mentioned in the article any growth below 7% will not make huge difference to employment. Secondly even if Pakistan economy is worth 200 odd billion our revenue is about 35 billion, which is less than 50% of the size of economy. The ratio to the revenue and GDP should increase. Brazil’s economy is around 2 Trillion but their revenue is about 1 trillion which about 50%.
    This can be achieved by getting more people to pay direct tax. I Understand that majority of citizens are financially unfit to pay tax but if a individual owns a business, cars or even holds a mobile phone i am sure he/she can pay tax .

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  • Pakistan
    May 9, 2012 - 8:55PM

    @Arif:

    What have you been smoking?

    Here are the true numbers for people below poverty line:

    Pakistan: 24%
    Greece: 20%
    Spain: 19.8%
    Portugal: 18%
    US: 12%
    India: 25%
    China: 2.8%
    UK: 14%

    Here is the complete list. This our problem, we jump to comment with hollow knowledge.
    http://www.indexmundi.com/g/r.aspx?v=69

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  • AnIndian
    May 9, 2012 - 9:42PM

    Let’s NOT collude with our ill-performing governments, who prefer to reduce the poverty line than reducing reducing poverty.

    The UN Human Development Initiative chaired by two of the most brilliant socio-economists of our time: Mahbub ul Haq (a Pakistani) and Amartya Sen (an Indian) came up with a reliable measure of poverty – the human development index.

    This is now improved as the Multidimensional Poverty Index, which measures real time deprivations like lack of Sanitation, electricity, health amenities and takes into account child mortality, child literacy, child malnourishment, asset ownership, etc. These are the statistics for 2010:

    China: 12.5%
    India: 53.7%
    Pakistan: 49.4%
    Sri Lanka: 5.3%

    Poverty & Ignorance are scourges to Human Societies; Let’s resolve to eliminate them…

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  • John
    May 10, 2012 - 12:23AM

    With a country facing 16-20 hours load shedding, rampant corruption and God knows what, the only people who are working diligently are the statisticians on state payroll.

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  • Meekal Ahmed
    May 10, 2012 - 12:37AM

    @Umair:

    There is no new data on the subject — perhaps deliberately. The poverty data comes from the poverty scorecard which I believe comes from the HIES. Sweeping judgements, one way or the other are neither credible nor enlightening. If you make a statement, please cite your sources.

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  • Meekal Ahmed
    May 10, 2012 - 12:39AM

    @rameez:
    So Brazil has a tax-to-GDP ratio of 50%!

    Where do you get these numbers from when all you have to do is go to Wikipedia which is free??!

    The only countries with a very high tax-to-GDP ratio are in Northern Europe (Sweden, Denmark) with Germany and France not far behind.

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