Economy watch: Govt reluctant to release below-expectations growth

Growth rate slipped below 4% in first quarter of current fiscal year.

ISLAMABAD:

The pace of economic growth, which the government claimed had picked in the first quarter of the current fiscal, has slipped below 4% in the second quarter, leaving the federal authorities wondering whether or not to officially release synopsis of the economy.

Sources in the Pakistan Bureau of Statistics (PBS) – the official body responsible to collect data – revealed that the rate of economic growth in October-December was below 4%. Due to these unexpected results the federal government is reluctant to release the data in violation of a decision of the PBS’s Governing Council, they added.

The PBS Governing Council, headed by Finance Minister Ishaq Dar, had decided that the quarterly GDP figures would be released within three months of the quarter. Thus, the PBS was bound to release the figure of the second quarter by March 31.

The delay in releasing the data also puts a question mark over the official claims of giving administrative autonomy to the PBS. While announcing the results of the first quarter in December last year, the finance minister had stated that the decision to release the quarterly GDP growth figures within three months would ensure independence of the PBS.



Sources said one of the reasons behind delaying the announcement was that the government wanted to avoid adverse impact of slowing economy in its bid to sell Eurobonds to international investors. The timing of releasing the growth figures was coinciding with the road shows held to auction the Eurobonds.

The government has completed the auction this week but paid a very high price for raising $2 billion from international markets.

“The growth number has not yet been finalised and it will be premature to speculate,” said PBS’s Chief Statistician Asif Bajwa. He did not give any reason for the delay but said it was always complicated to work out quarterly GDP growth figures, particularly at a time when the authorities were doing it for the first time.

Sources said according to provisional results complied by the PBS, the slowdown was across all sectors. They said the overall growth figure was coming in the range of 3.6% to 3.7%. In the first quarter the government had claimed that the economy grew at a rate of 5% and declared an early victory.

Economists fear that the government may force the PBS to manipulate the figures to get the desired results.

“Without manipulation the growth rate should be in the range of 3.5% to 4% and with manipulation it could be 4% to 4.5%,” said Dr Ashfaque Hasan Khan, a former economic adviser to the ministry of finance.

In the first quarter, the agriculture sector grew 2.5% against the target of 3.8%. The industrial sector grew 5.2% against the target of 4.5% and services sector grew 5.7% against target of 4.5%

According to a report of the Institute for Policy Reforms – an independent think tank – with corrections in the second quarter of the current fiscal, the growth in the first six months was expected around 4%. The report is prepared by former finance minister Dr Hafiz Pasha.

For the current financial year, the government’s growth target is 4.4% while international financial institutions, excluding World Bank, are projecting the growth in the range of 3.1% to 3.4%.

Probably knowing the outcomes, Dar in a recent statement said: “This year growth is expected to be 4%”. He gave this statement during his ongoing visit to Washington. His latest statement was in contradiction to his earlier statements.

Published in The Express Tribune, April 12^th, 2014.