GDP growth for the current year

EDITORIAL: Pakistan Bureau of Statistics (PBS) estimated Gross Domestic Product growth rate for the current year at 2.38 percent on the back of 2.09 percent in the third quarter, revised 2.71 percent during July-September (against the original estimate of 2.5 percent) and revised 1.79 percent in the second quarter (against the estimate of 1 percent).

The average of the three quarters based on the original (not revised) estimates would give the nine-month growth rate at 1.8 percent that in turn would require a growth of 3.9 percent in the last quarter to achieve the 2.38 percent annual growth rate for the current year – a rate that appears to be highly unlikely.

However, with the upward revision the last quarter would register a much more credible 2.72 percent growth to reach the 2.38 percent annual growth projection.

Disturbingly, this upward revision for the first two quarters (July-December) is reminiscent of downgrading the 2012 growth rate (when the Zardari-led government was in power) two years later by the Pakistan Muslim League-Nawaz government yet as this is the first year that PBS (Pakistan Bureau of Statistics) has begun to calculate quarterly GDP growth statistics perhaps the understatement is due to lack of experience and expertise.

And in this context, one would urge the PBS to take cognizance of the serious credibility issues it has been facing from independent economists in recent months who have challenged the inflation figures by pointing out that the lowest electricity tariffs rather than an average are being considered while the subsidised rates of essentials, applicable though not always available, in Utility Stores Corporation are being computed.

The actual rate, they further contend, is between 2.5 to 3 percentage points higher – a fact that accounts for the lack of a feel good factor by the general public in spite of claims by the PBS that inflation is on a downward trajectory – from 29.7 percent in December 2023 to 28.3 percent in January 2024 to 23.1 percent in February to 20.7 percent in March and 17.3 percent in April this year.

The PBS claims that the upward revision of growth in the first and second quarters is largely attributable to growth in mining and quarrying which almost doubled - from 7.78 percent to 15.46 percent in the first quarter; in the second quarter the PBS notes that industrial activities witnessed upward revision from -0.84 percent to 0.09 percent again on account of positive changes in mining and quarrying - from -4.17 percent to 4.39 percent - and construction (which bafflingly is cited as remaining in the negative territory from -17.59 percent to -10.85 percent).

In this context, it is relevant to note that further justification is required as mining and quarrying sector contributes around 1.6 percent to Pakistan’s GDP and employs around 200,000 people directly.

There is also the constant refrain that there was a decline in electricity, gas and water supply which no doubt contributed to not only a decline in output but also a decline in the quality of life of the general public.

It is therefore critical for a statistical gathering department to provide accurate data to the extent possible to enable the policymakers to take informed decisions.

Pakistani governments, some more than others, have pressured PBS to show data that shows a performance much better than is in fact the case which may have fooled the party leadership to retain incompetent economic team leaders but has rarely fooled the general public that engages in the market on a daily basis.

Copyright Business Recorder, 2024