From PTIMF to GDPTI!

While the finance minister has been shouting growth from the rooftop of Q Block in the secretariat, the P block next door — the domain of growth in terms of the rules of business — has just woken up to it. The planning minister was the last to come out in defence of the GDP growth of 3.94%. This is even more surprising because the Pakistan Bureau of Statistics (PBS), the organisation charged with collecting the data and estimating the GDP number, was recently made part of his ministry and that the approving inter-ministerial/interprovincial body, National Accounts Committee (NAC), is therefore convened and headed by the planning secretary. The poor defence and the vehement opposition all around announced the noisy transition from what Bilawal called PTIMF to what may be called GDPTI.

Puns apart, the story runs as follows. PBS, poorly staffed and without a chief statistician, did what it has always done. It analysed the data available before the NAC meeting and projected for the remaining period of the fiscal year. On the real side of the economy, the relatively more reliable data relates to two main activities, large scale manufacturing (LSM) and important crops. The LSM data is available on a monthly basis. Its growth in July-March was 8.99%, projected for the year at 9.29%. It may turn out to be higher as in April, for instance, there will be a very high jump because the index in April last year was -41.89%. In the previous two years, the growth was negative, which became the basis for a technically higher growth. Interestingly, the value in absolute terms in the current year is less than the value in 2018-19. In the case of important crops, the high growth of rice, sugarcane and maize and the negative growth of cotton was known. Data on wheat, which has the highest weight in crops, starts coming in just before the NAC meets. An irrationally exuberant Punjab food minister has claimed a record output. The PBS cannot but accept it. The overall growth of important crops is lower than last year, which was a lot higher because of a negative base. Growth in the wholesale and retail trade sector and transport, storage and communication, the largest components of the services sector, is derived from the commodity sectors growth. Both were in the red last year, producing the only negative growth in the services sector in the past two decades. Positive commodity sectors growth this year is accompanied by a positive services sector growth on the back of a positive growth in the wholesale and retail trade, although the transport, storage and communication subsector is still in the red. These sectors account for about half of the GDP.

Like always, the NAC met to approve these provisional estimates. As usual, a few issues were raised and clarified. The State Bank’s projection of 3% had under-projected the wheat output. The finance representative wondered how investment increase of 13.8% could produce the estimated growth, not knowing that growth in the country has long been driven by consumption, which increased by 16.1%. This is where some fudging takes place. Only the smaller component — 6% government consumption — is known. This too is from the original budget. The rest is a wild goose chase. Rapid increase of remittances, Ehsaas disbursements, spending by workers employed to utilise existing capacity facilitated by State Banks incentives to private borrowers, you name it.

At least half a percentage point is possibly attributable to GDPTI. Whether it is sufficient to sustainably move beyond PTIMF is anybody’s guess.

Published in The Express Tribune, May 28^th, 2021.

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