Where are the quarterly figures coming from?
Clearer picture is possible only if finance minister reveals detailed quarterly numbers along with methodology adopted
pervez.tahir@tribune.com.pk
In the euphoria over the agreement on aid through trade obtained under the GSP Plus arrangement with the European Union, the finance minister’s claim that economic growth in the first quarter of the current fiscal year (July-September, 2013) was five per cent compared with 2.9 per cent in the same period of the last fiscal year has gone unnoticed. If true, the event cannot but be a GDP Plus. It signals the revival of growth. According to him, the last time the economy grew at five per cent was in 2007-08. This is also true. The two figures, however, are not comparable. The former relates to a quarter and the latter is an annual number.
The minister, who also holds the portfolio of statistics, must have some superior knowledge, the source of which he keeps to himself. Pakistan’s national income accounts are collected and published by the Pakistan Bureau of Statistics (PBS) on an annual basis. Where did the quarterly figure come from? Quoting official sources, journalist Mehtab Haider of The News had reported on August 7, 2013 that the first-ever quarterly GDP data would be released by the end of the year. However, the PBS website only says this much: “The development of experimental series of estimates of quarterly GDP is in progress.” There is thus nothing in the public domain about the GDP growth in the first quarter of the current fiscal year.
In these days of rapid economic and financial changes, quarterly the GDP reports are necessary to make policy more effective. Decline in GDP for two successive quarters commonly indicates an economy in recession. Monetary policy to control inflation also benefits from quarterly information. The government publishes quarterly fiscal data, but the effectiveness of fiscal policy is reduced in the absence of quarterly GDP at current market prices. Pakistan is among the few countries of the world which does not keep quarterly accounts. A State Bank of Pakistan working paper on “Quarterisation of National Income Accounts of Pakistan” appeared in March, 2013. Obviously, it could not have contained estimates of July-September 2013. The series terminates in 2009-10. At any rate, it is no substitute for a regular series produced by the PBS, which is officially mandated to carry out the task.
The PBS does publish quarterly data on large-scale manufacturing and merchandise trade. These are important contributors to GDP. The weight of large-scale manufacturing is 11.7 per cent. Quarterly data on agriculture, the major sector with a weight of 23 per cent, is not available. This sector is also the major source of seasonality. So how does one judge the claim made by the finance minister on the floor of the National Assembly that “By the grace of God Almighty, two-thirds of the target of GDP has been achieved in the current fiscal year”?
In the first quarter, large-scale manufacturing experienced an impressive growth of 6.3 per cent. This growth was led by food, beverages and fertilisers, with implications for better agricultural performance. Suparco estimates rice and sugarcane production to be above targets but cotton production to be below target. In the coming months, textiles are likely to gain from GSP Plus status. Large-scale manufacturing growth in the first four months continues to be above five per cent, but the growth in the month of October has declined to 3.8 per cent. Hence, it is too early to read a pattern. A clearer picture is possible only if the finance minister would reveal the detailed quarterly numbers along with the methodology adopted. Until then, the GDP Plus is a matter of speculation.
Published in The Express Tribune, January 3rd, 2014.
The minister, who also holds the portfolio of statistics, must have some superior knowledge, the source of which he keeps to himself. Pakistan’s national income accounts are collected and published by the Pakistan Bureau of Statistics (PBS) on an annual basis. Where did the quarterly figure come from? Quoting official sources, journalist Mehtab Haider of The News had reported on August 7, 2013 that the first-ever quarterly GDP data would be released by the end of the year. However, the PBS website only says this much: “The development of experimental series of estimates of quarterly GDP is in progress.” There is thus nothing in the public domain about the GDP growth in the first quarter of the current fiscal year.
In these days of rapid economic and financial changes, quarterly the GDP reports are necessary to make policy more effective. Decline in GDP for two successive quarters commonly indicates an economy in recession. Monetary policy to control inflation also benefits from quarterly information. The government publishes quarterly fiscal data, but the effectiveness of fiscal policy is reduced in the absence of quarterly GDP at current market prices. Pakistan is among the few countries of the world which does not keep quarterly accounts. A State Bank of Pakistan working paper on “Quarterisation of National Income Accounts of Pakistan” appeared in March, 2013. Obviously, it could not have contained estimates of July-September 2013. The series terminates in 2009-10. At any rate, it is no substitute for a regular series produced by the PBS, which is officially mandated to carry out the task.
The PBS does publish quarterly data on large-scale manufacturing and merchandise trade. These are important contributors to GDP. The weight of large-scale manufacturing is 11.7 per cent. Quarterly data on agriculture, the major sector with a weight of 23 per cent, is not available. This sector is also the major source of seasonality. So how does one judge the claim made by the finance minister on the floor of the National Assembly that “By the grace of God Almighty, two-thirds of the target of GDP has been achieved in the current fiscal year”?
In the first quarter, large-scale manufacturing experienced an impressive growth of 6.3 per cent. This growth was led by food, beverages and fertilisers, with implications for better agricultural performance. Suparco estimates rice and sugarcane production to be above targets but cotton production to be below target. In the coming months, textiles are likely to gain from GSP Plus status. Large-scale manufacturing growth in the first four months continues to be above five per cent, but the growth in the month of October has declined to 3.8 per cent. Hence, it is too early to read a pattern. A clearer picture is possible only if the finance minister would reveal the detailed quarterly numbers along with the methodology adopted. Until then, the GDP Plus is a matter of speculation.
Published in The Express Tribune, January 3rd, 2014.