Overall size of the economy from 2006 to be freshly calculated. DESIGN: ESSA MALIK
ISLAMABAD:
A new rebasing exercise has been carried out by the Pakistan Bureau of Statistics (PBS), aimed at shifting the base (reference) year for calculation of economic statistics from fiscal 2000 to fiscal 2006. The share of services and agriculture in the overall size of the economy has resultantly increased, while the industrial sector has significantly shed its value. The exercise has resulted in gross value addition of 7.8% or Rs557 billion to the total size of the economy.
Headed by Dr Shahid Amjad, adviser to the prime minister on finance, the PBS Governing Council approved the change on Monday.
“The overall size of the economy from 2006 onwards will now be calculated afresh and presented to the National Accounts Committee (NAC) for approval,” Chief Statistician of Pakistan Asif Bajwa told The Express Tribune. The NAC meeting will also give approval to this year’s official growth rate. It is scheduled to meet on May 3.
As a result of the shift, the total size of the economy in fiscal 2006 will now be considered as Rs7.72 trillion, higher by Rs557 billion than the size of the economy in fiscal 2000.
The current size of the economy, estimated as Rs23.6 trillion in 2012-13, has been calculated keeping the base year as fiscal 2000. Experts say its size will increase after new calculations, which will not only add additional value to this year’s growth rate, but also lower the budget deficit in percentage terms.
Taking the new base year as 2005-06, the size of the agricultural sector now stands at 23% of total Gross Domestic Product (GDP), as against the earlier 20.3%. Due to the rebasing, Rs318 billion has been added to the value of the agriculture sector, taking its total size to Rs1.78 trillion.
The contribution of the services sector to total GDP, meanwhile, has increased to 56% against its earlier share of 52.8%. The value of the services sector in absolute terms has been reassessed as Rs4.4 trillion – higher by Rs547 billion.
At the same time, the industrial sector has shed its value by Rs308 billion, while its share in GDP has shrunk to 20.9%, against an earlier share of 26.8%. Its total value has reduced to Rs1.62 trillion due to major contractions in the sizes of the sub-sectors of large and small scale manufacturing.
Rebasing exercises usually increase the size of the economy due to the addition of new goods and services into the calculation. The government had carried out 223 studies for the last time the economy was rebased, which had been debated extensively in technical committees overseeing the matter.
Bajwa said the technical committee constituted for the recent exercise reviewed every subsector of the economy item-by-item, and had the exercise vetted by experts. Thus, he said, there are no chances of error. The PBS Governing Council was also informed that double counting, omissions and errors have also been rectified as a result of the rebasing.
The rebasing has been done in the light of improvements in international statistical systems, say officials. The availability of new data sources through censuses, surveys and studies, updated prices and industry bases have all been utilised in the exercise.
A similar exercise aimed at rebasing the economy was conducted last year, which immediately ran afoul of analysts as it resultantly reduced the overall size of the economy by Rs2.5 trillion of its value. The exercise had sent waves in the corridors of economic power, as it necessitated a revision of all major economic indicators over the preceding five years.
During the meeting, the PBS Governing Council has also approved the initial budget estimates for the holding of a population census, and has directed they be sent to the Finance Division so that they can be provisioned for in the next budget. A subcommittee has also been set up in this regard.
Published in The Express Tribune, April 30th, 2013.
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All it appears then is well with the economy of Pakistan and there was no truth in the story, incidentally also written by Mr. Shahbaz Rana and printed in the Express Tribune a year back :
http://tribune.com.pk/story/371594/double-counting-gdp-overestimated-may-be-slashed-by-10/
So the GDP figures will increase and the budget deficit as a percentage of GDP will go down. I suppose the tax-to-GDP ratio will also go down. That won't sit well with our IMF overlords.
In the year 2000, there was a tiny mobile sector, by 2006 90 million people had cellular connections. Should that be ignored and not adequately accounted for in GDP stats just because people are cynical of any change?
Why is everything a gimmick? Both the US and UK are changing the way they measure GDP in June which will add 3% to their GDP's and in UK's case, recalculation of previous years data may even wipe out its second recession. The makeup of the economy changes constantly and it has to be accounted for.
Hope this is not some new accounting gimmick.
Please stop massaging the data to make things look better -- do something productive!
so we change the base as we feel advantageous.. when it went to loss, which is the real picture, we shout afoul. All these are election gimmicks. 500 billion added to economy it seems. Who are we fooling? Ask these guys to come out in the street and see the condition. We have fudged our numbers to IMF and World Bank in 2011 to misled them. Now we are fudging numbers before elections. This is shameful.