EDITORIAL: The 112th meeting of the National Accounts Committee (NAC) approved the Gross Domestic Product (GDP) growth rate for the second quarter at 1.73 percent while emphasizing that the growth rate was provisional.
Two observations are in order. First, the Pakistan Bureau of Statistics (PBS) consulted with the World Bank team to create a quarterly national accounts (QNA) methodology, and it was during the 107th NAC meeting held on 28 November 2023 that the decision was taken to introduce QNA in the country’s statistical system.
Thus this is a relatively new exercise undertaken by the Pakistan Bureau of Statistics. In this context it is relevant to note that out of the five quarterly GDP determination exercises undertaken so far, including the one recently released, the results of four were revised – three in 2023-24 and one in 2024-25 as follows: quarterly growth rates for Q1, Q2 and Q3 during 2023-24 changed to 2.69 percent, 1.97 percent and 2.36 percent from 2.71 percent, 1.79 percent and 2.09 percent as presented in 109th meeting of the NAC, respectively.
In other words, all three provisional growth rates were downgraded no doubt at the time annual GDP was being calculated. In the current fiscal year the Q1 growth rate has been upgraded by 0.42 percent - from 0.92 percent to 1.34 percent and at this moment in time it is unclear whether the second quarter growth will be up or downgraded or has not yet happened the provisional figure is the actual revised figure.
And secondly, the International Monetary Fund in its October 2024 documents titled Article IV Consultation and Request for An Extended Arrangement under the Extended Fund Facility noted the following: The fiscal year 16 NA rebasing and recent publication of quarterly GDP have provided a better basis for assessing economic developments, but important shortcomings remain in the source data available for sectors accounting for around a third of GDP, while there are issues with the granularity and reliability of the GFS.
The authorities are prioritizing addressing these weaknesses, supported by Fund Technical Assistance (TA) with a mission planned this July, on the Government Finance Statistics and a new PPI index (to support more accurate estimation of GDP volumes, with a view to developing an initial PPI framework by October 2026) and the Pakistan Bureau of Statistics will soon begin fieldwork for four major surveys (including Agricultural Survey, Labor Force Survey and Household Integrated Economic Survey) ahead of the upcoming NA rebasing to FY26 to reduce reliance on extrapolation.
QNA estimates therefore do not indicate a trend by being consistently over-stated, that one could argue is due to political considerations, or understated to provide a little space to the government in its reviews with the IMF mission in terms of phasing out severely contractionary monetary and fiscal policies.
Copyright Business Recorder, 2025
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