Economic growth rate revised downward

ISLAMABAD: The federal government on Friday officially revised downward the 5.8% economic growth rate in the last year of the Pakistan Muslim League-Nawaz (PML-N) government's tenure to 5.2%, denying its arch political rival a claim over achieving the highest growth rate in 13 years amid political uncertainty triggered by the Panama Papers leaks.

The government called a special meeting of the National Accounts Committee (NAC) in the mid of the fiscal year 2018-19 and lowered the Gross Domestic Product (GDP) growth rate for fiscal year 2017-18 to 5.22% from 5.8%.

The 5.22% GDP growth rate would now be the lowest rate in three years.

It is for the first time in 15 years that any government has held the NAC meeting during the course of the fiscal year.

Earlier, the NAC meetings were held a month before presentation of the annual budget.

The NAC has a mandate to approve the national output numbers, based on the information received from the federal and provincial governments' departments.

The 100th meeting of the NAC to review the final and revised estimates of GDP for the years 2016-17 and 2017-18, respectively was held at the Pakistan Bureau of Statistics (PBS), according to an official handout issued by the PBS.



"The revised growth rate of GDP for the year 2017-18 is 5.22%, which was provisionally estimated at 5.79% earlier," said the PBS. The NAC kept the GDP growth rate unchanged at 5.4% in the preceding fiscal year 2016-17.

The PBS said the special meeting of the NAC was called to meet the requirement of Ministry of Planning, Development and Reform for revised GDP data for the year 2017-18 to provide them a baseline to work on the 12th Five-Year Plan (2018-23).

However, the GDP data presented before the meeting is subject to minor change in the next meeting of the NAC, it added.

But the Planning Ministry remains confused over the status of the 12th Five-Year Plan, as the State Bank of Pakistan and the Ministry of Finance seem overpowering.

The Finance Ministry's macroeconomic framework is far conservative and at times unrealistic when compared with the working of the Planning Ministry. The Planning Ministry has failed to meet its deadline to present the 12th plan to the federal cabinet for endorsement before end of January.

Nonetheless, former planning minister Ahsan Iqbal smells a conspiracy in the PTI government's surprising move.

"After the PTI miserably failed to manage the economy, it has now resorted to doctoring the economic statistics," said Iqbal while commenting on the development.



The former minister said by lowering the growth rate estimates of the previous fiscal year, the PTI government wanted to take advantage of lower benchmark to claim higher economic growth rate in its first year in power.

Iqbal said the 5.8% GDP growth rate was consistent with the projections of the International Monetary Fund, the World Bank and the Asian Development Bank that have forecast minimum 5.5% growth rate for 2017-18.

The PML-N believed that had the Panama Papers controversy not hit the country, the government was well-positioned to achieve 6.2% annual target for the fiscal year 2017-18.

The Panamagate scandal led to disqualification of former prime minister Nawaz Sharif and the then finance minister Ishaq Dar had to flee the country to evade arrest.

But the PBS said that the economic growth has been revised due to low output in industrial, services and agriculture sectors.

Independent experts had also questioned the PML-N government's claim of 5.8% GDP growth rate, which they said had been worked out on the basis of six months data.

Agriculture sector

The revised growth in the agriculture sector for 2017-18 has been estimated at 3.7% which was provisionally estimated at 3.81%, according to the NAC working paper. However, the crops' sub-sector has improved from earlier 3.83% to 4.24% whereas livestock has slightly decreased from 3.76% to 3.62%.

Major adjustment has been made in the forestry sector where against the PML-N's estimates of 7.2% growth, the PTI has now showed a contraction of 1.8%. The growth estimates for the fishing sector have also been cut from 5.8% to 5%. The cotton ginning growth estimates have been revised slightly upward.

Industrial sector

Major changes have been made in growth estimates of the industrial sector largely because of lower growth in large-scale manufacturing and construction activities. The revised growth in industrial sector is 5%, as against 5.8% provisional estimates. Mining and quarrying has improved from provisional growth of 3.04% to 3.9%, whereas LSM has declined from 6.13% to 5%. Electricity generation has declined from 1.84% to 1.15%, according to the NAC. The revised growth in construction sector stood at 7.1% which was 9.13% in the provisional estimates.

Services sector

The growth of services sector has declined from provisional estimates of 6.43% to 5.8%, according to NAC. The growth in wholesale and retail trade sector also decreased from 7.51% to 6.4%, transport, storage and communications sector growth was also lowered downward to 2% from provisional growth of 3.58%. Finance and insurance has registered a decline from 6.13% to 5.4%. The general government services sector growth was cut from 11.42% to 9.6. But growth in other private services was revised upward from 6.15% to 8.1%.