NAC endorses 4.09% growth in GDP

Shahbaz Rana May 18, 2010

ISLAMABAD: The National Accounts Committee (NAC) on Tuesday endorsed the figure of 4.09 per cent as economic growth for the current fiscal year, 2009-2010, ignoring concerns of committee members about the authenticity of growth shown in certain sectors, revealed sources.

The meeting was chaired by the Secretary Statistics Division, Saeed Ahmad Khan. Official sources said that the Principal Economic Adviser Saqib Sherani and the Chief Economist of Pakistan Dr Rashid Amjad contested the small-scale manufacturing investment figures as well as questioned the declared wholesale and retail sector growth. Both figures are exaggerated, they feel.

Independent economists have already alleged that the government fudged growth numbers to show the economic output as higher than it actually is. Concerns raised by committee members have proven that the economists’ concerns were not baseless. The high figures have been reached by lowering last year’s growth figures. For instance, the government projected 5.12 per cent growth in wholesale and retail sectors by making extraordinary adjustment in last year’s growth of this sector. Last year, the growth in this sector was recorded at 3.13 per cent but that figure has been revised as negative 1.41 per cent, revealed official documents.

Growth in private fixed investment is negative 3.5 per cent but in small-scale manufacturing investment growth was shown at 10.5 per cent. In the construction sector investment growth is negative 2.1 per cent but the government showed the construction sector growth at 15.4 per cent, the third highest in almost two decades. According to the revised growth figures of financial year 2008-2009, growth in the construction sector was negative 11.17 per cent. “The concerns have been noted down, it is better to approve the growth figures,” sources quoted Khan as saying. However, he was not available for comments.

It is not the first time that economists have unearthed such discrepancies. Last year, the NAC showed the economic growth at 2.24 per cent. Only after criticism by independent economists did the government revise the number to two per cent. Economists said that in order to get advantage of the lower base the government once again revised last year’s two per cent growth number to 1.21 per cent. The working paper of the NAC meeting showed that the agriculture sector grew by two per cent against a target of 3.8 per cent, industrial sector by 4.9 per cent and the services sector by 4.6 per cent against a target of 3.9 per cent.

The paper also said that the agriculture sector grew by two per cent. But in the major crops the growth was negative 0.2 per cent and in minor crops it was negative 0.19 per cent. The growth puller in the sector was livestock, which grew by 4.2 per cent. “Livestock growth is not calculated but given,” said a senior official of the Statistics Division. He said the growth was estimated by taking into account the difference between the livestock censuses of 1998 and 2008.

According to an economist, even the two per cent figure was reached by making an adjustment in last year’s agriculture growth numbers. Last year’s agriculture growth rate, which was declared as 4.7 per cent, was lowered to 4.02 per cent. The industrial sector grew by 4.9 per cent this year. Last year the growth was negative 1.89 per cent. Here the puller was construction and large-scale manufacturing sectors. The authorities showed a growth of 4.36 per cent in large-scale manufacturing this year as against a negative growth of 8.18 per cent last year. The services sector grew by 4.56 per cent, again a work of creative accounting.

The government revised the last year’s services sector growth to 1.58 per cent from 3.62 per cent. The NAC also revised last year’s GDP growth from 2 per cent to 1.21 per cent. Not only that, it also changed the growth numbers of fiscal year 2007-2008 for the second time. In 2007-2008 the GDP growth was calculated at 5.8 per cent. In 2008-2009 it was revised to 4.1 per cent and this year it was revised again to 3.68 per cent.

Published in the Express Tribune, May 19th, 2010.

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