Bad data

According to SBP's report, the PBS may be systematically and grossly underestimating the true size of the economy

How big is the Pakistani economy? The answer to that question is far more complicated than simply looking up the size of the gross domestic product (GDP) that is produced by the Pakistan Bureau of Statistics (PBS) every quarter. According to the State Bank of Pakistan (SBP), the PBS may be systematically and grossly underestimating the true size of the economy. This may seem like good news. After all, it means that the average Pakistani may well be richer that we have previously thought. But there are several downsides to having a larger GDP as well. For one thing, if the GDP is larger, and tax collection remains at current levels, mathematical logic dictates that the tax-to-GDP ratio is far lower than the current figures suggest. Given that Pakistan’s tax-to-GDP ratio is already abysmally low, rebasing it lower would only serve to highlight the fact that the Federal Board of Revenue is even more incompetent than we thought.

But barring what the new numbers reveal, the SBP analysis highlights a broader point: there is a serious dearth of accurate data about Pakistan’s demographic, social and economic indicators. How on earth can the government of the sixth-largest country and the 27^th largest economy in the world hope to prepare reasonably accurate economic plans if it does not even know what the economy or the socio-demographic landscape of the country looks like? How can this country function without having conducted a population census since 1998? More disappointing than the fact that nobody in Islamabad seems focused on producing accurate numbers and nobody seems to even be aware of the need for good data. Is it really too much to ask that the government produce accurate measures of what it is required to under the Constitution? We suspect that the GDP numbers are but the tip of the iceberg. It is entirely likely that the country has had inaccurate data about several other key economic indicators. How much longer does Islamabad plan to keep on shooting in the dark?

Published in The Express Tribune, January 22^nd, 2015.

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