Incredible claims

Prime Minister’s claim that GDP has grown by 5.1 per cent in the past year seems to be completely unbelievable.

It is invariably a bad idea to fudge economic growth numbers. It is an incalculably worse idea to do so at a time of economic hardship, when the figures grossly overstate people’s own perceptions of how well the economy is doing. Prime Minister Nawaz Sharif’s claim that the Gross Domestic Product (GDP), the total size of the economy, has grown by 5.1 per cent in the past year seems to be completely unbelievable and the prime minister’s office would do well to issue a clarification or retraction in order to avoid further damaging the government’s already shattered credibility.



To be fair to the prime minister, the quotes attributed to him in media sources have not identified a time frame for that growth rate. It might be that the growth rate he was referring to was the quarterly GDP growth rates, in which case, there is somewhat of a chance that the number may be close to reality. However, that seems highly unlikely since neither the Pakistan Bureau of Statistics nor the State Bank of Pakistan — the country’s two leading sources of economic data — currently release GDP numbers on a quarterly basis.

It may be possible that the prime minister is not simply using a made-up statistic. However, in macroeconomics, more than other areas, it is entirely possible to make a factual statement without being truthful. If the government has changed the calculations of GDP to give a more favourable number just because it is politically convenient, then it is effectively rendering all economic data meaningless. The GDP growth rate is the biggest headline number for the economy, and if the government’s numbers on that are not reliable, then everything else holds little weight.

What we find baffling is why the Nawaz Administration would do something like this. It has barely been in office for half a year, so any GDP numbers could not possibly reflect its own performance. Why try to brag about GDP numbers now, instead of a year from now, and use real and justifiable figures to do it? The previous administration did not exactly set a high bar, with the economy growing during their time at the slowest pace in Pakistani history. Why fudge the fact when the truth alone will suffice?

Published in The Express Tribune, December 18^th, 2013.

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