GDP growth to range from 4.5-5.5%

Days before a scheduled meeting to approve the outgoing fiscal year’s economic growth rate, contradictory estimates are being made about the total national output, indicating a growth range of 4.5% to 5.5% amid claims that the Pakistan Bureau of Statistics (PBS) is being asked to adopt a conservative approach. Sources told The Express Tribune that the PBS – the national data collecting agency – had lately been asked to review the methodology being used to determine the provisional economic growth rate.

A higher growth may not only improve the image of the previous Pakistan Tehreek-e-Insaf (PTI) government but could also have an adverse impact on the next year’s growth rate. The Ministry of Information and Broadcasting on Monday published advertisements in all leading newspapers to show the poor economic performance of the PTI government. The advertisements put the “expected” gross domestic product (GDP) growth at 4% for the current fiscal year 2021-22, compared with 6.1% at the end of term of the last PML-N government.

The numbers indicate that PTI’s wrong policies have once again caused the external sector crisis – this time severer than witnessed before. PBS sources said that the initial data received from multiple sources suggested that the GDP growth for the outgoing fiscal year could be around 5.5%. They said that the agriculture sector could post around 4.5% growth on the back of better performance of important crops, except for wheat.

The industrial sector may grow over 7.6% on the back of almost double-than-targeted growth in the largescale manufacturing (LSM) industry. PBS last week reported that LSM grew 10.4% during the first nine months of current fiscal year against the annual target of 6%. Based on the initial estimates, the services sector is expected to register a growth of around 5.3%, the sources added.

The National Accounts Committee (NAC) – the body having mandate to approve the final growth figures – is scheduled to meet on Wednesday under the chairmanship of secretary in charge of the planning ministry. The planning secretary has held multiple meetings in recent days on the GDP growth prospects, with the latest one held on Monday. The planning secretary and member national accounts of the PBS were not available for comments.

“PBS will not accept any pressure and everything will be done transparently and diligently,” a senior PBS official remarked on condition of anonymity, while conceding that pressure was being exerted on the organisation. Ironically, the PBS had also come under pressure in May last year from the then PTI government as it was asked to inflate the GDP growth figure. The move was thwarted when a story appeared in The Express Tribune.

The PBS official said that finalisation of the GDP growth figure was a complex process and the bureau would undertake the exercise as per international standards and the laid-down procedures. Sources said that one group wanted the PBS to show the agriculture sector growth at less than 4%, industrial sector expansion below 6% and services sector growth at around 4.5%. This would bring the overall GDP growth to around 4.5%, said the sources. Planning ministry sources, however, argued that the manipulation of figures was not possible due to the availability of public data.

The higher-than-targeted growth in the LSM and agriculture sectors as well as imports has provided a cushion of about 1.3% to the overall GDP growth rate, they added. Record high remittances and imports have fed the economy well, promoting consumption, which will keep the growth rate higher than the official target of 4.8%, said the sources.

Pakistan’s economy is consumption-led and is financed by high imports and foreign savings – the two critical factors that have sown the seeds of perpetual external sector crisis. The country is standing at the crossroads where inaction on the part of new government may lead to insolvency. If the government implements import compression measures, the GDP growth in the next fiscal year could be less than this year’s expected growth of over 5.5%. This could become a slogan in the hands of the PTI.