Latest available information was up to the month of February 2014, was accordingly used to derive the estimates of LSM
ISLAMABAD: This is with reference to Dr Ashfaque H Khan’s article “State of the economy” published in your newspaper on October 10. He stated that “Bent upon showing a growth number of more than four per cent in the year 2013-14, the government played havoc with national account statistics.”
Dr Khan who himself remained involved in computation of growth numbers, should be well aware of the system of computing the GDP and the international methods used in its estimation. His article is not an impartial work of research as it has a set, preconceived outcome in mind, without gathering the required data and facts. It is an international practice that national accounts are first presented as provisional accounts based on the available data. These are then revised over a period of one year (provisional actual) and thereafter, presented as final (actual) after another year. The data presented for 2013-14 is provisional, while the data for 2012-13 is revised (provisional actual) and the data for 2011-12 is final (actual).
Dr Khan’s claim regarding availability of data is not true and completely baseless. The Quantum Index Manufacturing Industries, the indicator being used to measure the performance of this sector, is compiled on the basis of information received from three major sources: the Oil Companies Advisory Committee, the Ministry of Industries and the Pakistan Bureau of Statistics, which takes time and is published after a certain time lag. The latest available information was up to the month of February 2014 and was accordingly used to derive the estimates of large-scale manufacturing, which were approved by the National Accounts Committee (NAC). This has not been done for the first time. In many of earlier NAC meetings, the same procedure had been used. The GDP numbers for any given year are calculated on the basis of data available up to the date on which the meeting of the NAC is held. As the data, at the time, was for only eight months, the same was used. The GDP numbers remain provisional and are not revised till the full year data becomes available.
Dr Khan’s claim that “the extraordinary growth in construction inflated real GDP” is also not correct. It seems he has taken a very narrow and inappropriate view of the method through which the value added in construction is calculated. Cement does not feature directly in the value-added estimation in the construction sector. This is computed on the basis of land improvements, construction of bulk-roads, railways, utility lines, power lines and waterways. The data for these activities are collected from all relevant entities. The higher growth in the sector is due to increased activities in the face of a negative growth of 1.68 per cent last year. Hence, there is no justification in asserting that construction inflated real GDP growth.
Dr Khan’s further assessment regarding the state of the economy going down is also not correct. Despite the floods and dharnas, inflation has been kept firmly in single digit and recorded at 7.5 per cent during July-September. The signs of revenue collection showing growth of nearly 14 per cent over the last year, remittances improving about 20 per cent against last year’s growth helping improve the balance of payments, budget deficit declining with contained government borrowings from the central bank and a better debt-to-GDP ratio are all indicative of an emerging and healthy economy and not the gloomy economy Dr Khan would have his readers believe.
Ministry of Finance
Published in The Express Tribune, October 25th, 2014.
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