Govt misses most critical growth target amid suspicion

Published: May 21, 2016
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Agriculture output contracted 0.19%, contribution to GDP shrank 20.5%. PHOTO: APP

Agriculture output contracted 0.19%, contribution to GDP shrank 20.5%. PHOTO: APP

ISLAMABAD: The PML-N government, for the third year in a row, has missed the most critical target of annual growth rate amid deep suspicions that even achieved growth rate of 4.7% for the outgoing fiscal year was a result of some ‘manipulation’.

For the first time in decades, the output in agriculture sector – the backbone of the economy – contracted in the outgoing fiscal year, instead of showing growth.

Without reforms, high growth target may remain elusive

More than two-thirds of the growth – 71% precisely – came from the services sector. The government achieved its services sector growth target of 5.7% while the growth in the industrial sector remained slightly higher than the target of 6.4%.

The Gross Domestic Product (GDP) – measure of increase in monetary value of all goods and services produced in one year – is projected to have grown at a rate of 4.7% during the fiscal year 2015-16 ending June 30, according to the National Accounts Committee (NAC).

In its 97th meeting, the NAC approved the provisional growth rate for the outgoing fiscal year, revised down the 2014-15 growth rate to 4% and approved the final growth figure of 2013-14 at 4.1%, according to the NAC documents.

It is the third consecutive year that Prime Minister Nawaz Sharif’s administration has missed the most important and critical economic target.

Budget 2015-16: Govt eyes 5.5% GDP growth next year

For the outgoing fiscal year, the government had set the GDP growth target at 5.5%. The country needs an annual growth rate of 7% to absorb the youth bulge. If the pace of growth were to fall below this rate, it would lead to increased unemployment.

According to sources, on May 18, Pakistan Bureau of Statistics Chief Statistician Asif Bajwa informed Finance Minister Ishaq Dar that the estimated growth rate for 2015-16 was coming close to 4.2%. Bajwa also informed Dar that the revised figures of the previous two financial years were slipping below 4%. Dar, however, did not accept the figures and asked Bajwa to go back to the drawing board.

When contacted, Bajwa neither denied nor confirmed his May 18 meeting with Dar.

“The figure keeps changing until the final figure is approved and the provisional GDP growth rate for 2015-16 is 4.7%,” said Bawja while talking to The Express Tribune.

When agriculture sector contracted, the private and public investment as a percentage of GDP was not significantly increasing.

“Where did the 4.7% growth rate come from?” questioned the Ministry of Finance Economic Adviser Dr Ashfaque Hasan Khan.

Khan said his calculations showed that the growth rate in the outgoing fiscal year was not more than 3.5%.

The 4.7% growth rate was somehow better than the 4.0% achieved last year and slightly better than the International Monetary Fund (IMF) projection of 4.5%.

Planning Commission former deputy chairman Dr Nadeemul Haque argued that there was no difference between 4% or 4.5% growth rate, as there is always room for statistical error of up to 0.3%.

Finance Minister Ishaq Dar will formally announce the provisional growth rate of 4.7% on June 2, with the release of the Economic Survey of Pakistan 2015-16.

Economic Survey 2014-15: Ishaq Dar touts economic growth amidst missed targets

Out of 20 key growth indicators, nine have hit the government’s targeted growth rates while 11 indicators – primarily in agriculture and industrial sectors – remained below expectations.

Agriculture

It was for the first time in decades that the agriculture sector contracted by 0.19% as opposed to the 3.9% growth target by the government. Due to contraction, the agriculture sector contribution to GDP shrank 20.5%. The ruling Pakistan Muslim League Nawaz (PML-N) government has been accused of ignoring this sector that employs close to 37% of the labour force. During the PML-N’s two stints in office in the 1990s, agriculture grew by an average of 2.52% per year, as opposed to overall economic growth during that time averaging 4.06% per year.

Production of both major and minor crops, cotton ginning and livestock, declined compared to the past year. Only forestry and fishing sector grew in the agriculture sector. The cotton production declined to 10.1 million bales – as much as 27.8% less than the last production. Wheat production marginally grew to 25.48 million tons.

Industries

The government achieved the industrial growth target and the output stood at 6.8%. The output of large-scale manufacturing stood at 4.6%, below the official target while small-scale manufacturing grew to 8.2%, slaughtering 3.6%, electricity generation and distribution 12.1%, mining and quarrying 6.8%, and construction 13%.

However, questions have been raised over growth in construction as no sub-sector grew more than 10%.

Services

The services sector, which accounts for more than half the economy, grew by 5.7%. Aided by heavy government borrowing and an increase in the money supply, the financial services sector and government services beat expectations. But other subsectors – transportation, communications, wholesale and retail – missed the growth targets. 

Published in The Express Tribune, May 21st, 2016.

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Reader Comments (13)

  • Common Pakistani
    May 21, 2016 - 9:33AM

    “It was for the first time in decades that the agriculture sector contracted by 0.19% as opposed to the 3.9% growth target by the government.”

    The agriculture sector had experienced negative output during Musharraf regime one and half decade(s) back.Recommend

  • H.A.Khan
    May 21, 2016 - 12:28PM

    Odd weather pattern played a negative role in growth of agriculture sector.Nothing odd about minor negative variance.Growth in Industrial sector is very positive.
    Major concern is and should be low tax collection inspite of withholding Refunds of over Rs 250 BillionRecommend

  • May 21, 2016 - 1:24PM

    Next big crises in Pakistan will be water crises. Government is busy in making roads/motorways but not focusing on dams. Recommend

  • Mohammed
    May 21, 2016 - 1:41PM

    More Noora lies. Take off 1% and you get the real figure.Recommend

  • BruteForce
    May 21, 2016 - 3:45PM

    PBS is the main player in forging the figures from government side to deceive public, opposition and international agencies. From one company to another, they use different formulae to derive growth rates of their choice.

    For example, if 2 quarter data is available and growth over the last year’s two quarters does not serve their purpose, they will repeat the very same data for the next two quarters and calculate the growth based on this full year data over the last year. If again this does not serve their interest, they’ll simply put the available data under their table and pretend that as it is simply not available. In this way they keep doing different exercises unless they arrive at a pre-thought figure for the whole economy.

    A thorough audit is thus necessary to figure out where and why data is manipulated and who is responsible for that. In most cases this is done with full support and guidance from those sitting at the top in M/o. Finance with blessing even from their higher-ups. Recommend

  • Parvez
    May 21, 2016 - 4:10PM

    To get a more accurate picture an estimate of the undocumented ( Black ) economy should be given……..like estimates of properties held by Pakistanis ( a dual national is still a Pakistani ) in places like Dubai, London etc ( money earned in Pakistan but no tax paid in Pakistan but sent abroad )….this is just one example. Recommend

  • vinsin
    May 21, 2016 - 5:05PM

    2% growth rate is just because of lower oil and gas proces. Higher prices will decrease growth rate by 200 basis point.Recommend

  • Hamza
    May 21, 2016 - 5:40PM

    @Common Pakistani:
    Dint compare his govts economic performance to this govts. He also led the country to 8% GDP growthRecommend

  • Hamza
    May 21, 2016 - 5:42PM

    @vinsin: thats not how this works lol you obv know zeroRecommend

  • Hamza
    May 21, 2016 - 5:43PM

    Not a fan of N league but the macroeconomic stablization policies have helped thats for sure. Economy will grow next few years if things with agriculture stay on targetRecommend

  • Ch. Allah Daad
    May 22, 2016 - 12:45AM

    The government will miss all future targets until and unless the anarchists are not sidelined forever. The fake revolutionary thug and Khan destroyed economy when it was about to take off.Recommend

  • One-sided
    May 22, 2016 - 4:51AM

    The title highlights government failure in agriculture, ignoring the successes in growth of service industry and in the industrial sector.Recommend

  • Adnan Siddiqui
    May 22, 2016 - 6:12AM

    Developmental expenditure has been coming down each year. How do you expect growth targets to be met?
    All the governments are interested in is building roads and metros where they can get massive kickbacks.Recommend

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