ISLAMABAD: The National Accounts Committee (NAC) on Friday could not agree on economic growth rate for the outgoing fiscal year after some members raised objections over the methodology in the aftermath of the novel coronavirus outbreak.
In order to approve the provisional gross domestic product (GDP) growth figure, the NAC meeting had been called on Friday with Planning Secretary Zafar Hasan in the chair.
But the meeting ended inconclusively after some participants raised concern over the methodology being used to work out the number.
Pakistan Institute of Development Economics (PIDE) Vice Chancellor Dr Nadeemul Haque raised questions over the methodology used to work out the economic growth number.
The NAC set up a committee that would now review the methodology, said officials of the Ministry of Planning. The committee will be headed by Pakistan Bureau of Statistics (PBS) Member National Accounts Bahrawar Jan.
There will also be representation from the Ministry of Finance, Planning Commission, PIDE and the State Bank of Pakistan in the committee.
The Pakistan Tehreek-e-Insaf (PTI) government had set economic growth target of 4% for fiscal year 2019-20 ending on June 30. Before the Covid-19 spread across the world, the finance ministry and the IMF projected 2.4% GDP growth in the current fiscal year.
However, following the outbreak of the deadly pandemic, the IMF, World Bank, finance ministry and SBP predicted up to negative 1.5% economic growth for the current fiscal year. Sources said the Ministry of Planning's view was that Pakistan's economy started bearing the brunt of Covid-19 impact only after March 23. It estimated that the economy would be the worst affected only in the fourth quarter (April-June) of current fiscal year.
However, sources said Nadeemul Haque took the position in the meeting that nine-month data should not be used for working out the annual numbers. He also had reservations about the retail-sector growth estimate by the PBS.
"I did not object but there was discussion, which is quite normal," Haque said, adding that the sub-committee would try to clarify the issues raised during the meeting.
"Economic growth will be negative during this fiscal year and the only question is by how much," he remarked.
Pakistan may fall into recession - for the first time in 68 years - due to the severe impact of the deadly pandemic, and the economy is expected to shrink by up to 2.2% and a painful decline in per capita income is projected, according to the World Bank.
The country was in similar devastating economic conditions almost 68 years ago but even after the third India-Pakistan war which led to the separation of East Pakistan, the country posted some growth.
"Pakistan suffered a decline in its GDP only once in its entire history (1951-52). Even at the height of the Bangladesh crisis in 1971, the GDP growth was positive at 1.23%," wrote Planning Commission's former chief economist Pervez Tahir in an article that appeared in The Express Tribune in 2013.
Pakistan's GDP may contract in the range of 1.3% to 2.2% during the current fiscal year, reported the World Bank.
These are the steepest estimates so far given by any multilateral agency, local authorities and independent experts. The Ministry of Planning had predicted Rs2 trillion to Rs2.5 trillion in economic losses in the April-June period but it did not forecast the economy would fall into recession.
In a meeting of the Fiscal and Monetary Policies Coordination Board, the Planning Commission said the economy would grow 1.5% in case of partial lockdown. It predicted a contraction only in case Pakistan enforced a complete lockdown during the May-June period. Adviser to Prime Minister on Finance Dr Abdul Hafeez Shaikh said on Wednesday that the economy would contract 1.5% in the current fiscal year and would grow only 2% in the next fiscal year, starting July.
Published in The Express Tribune, May 16th, 2020.
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