Hoping for growth

Government ministers have lately been reported in the media making statements that 2020 is the year when Pakistan’s economy will finally recover and support jobs. Now the finance minister himself has also joined the chorus. Dr. Sheikh is reportedly hoping that 2020 will bring along export revival, higher FDI and remittances, lower inflation, CPEC’s industrial phase, and more development and pro-poor spending.

It would be ideal if great expectations are also backed by some economic forecasting by at least the ministers who deal with the economy. But since the claims or hopes do not have any forecast as to how economy will fare in the near future, it suggests a tendency to play it safe and evade numerical accountability with verbal flourishes.

Already, a GDP growth forecast that has been doing the rounds between the Planning Commission and the Finance Ministry during official meetings now seems idealistic. Apparently unwilling to buy into the whole “recovery” narrative, the central bank’s latest quarterly economic bulletin minces no words when it states that “achieving the real GDP growth target of 4 percent appears unlikely”.

The downbeat sentiment emanating from the SBP report owes mainly to lackluster performance in the agriculture sector, the continual decline in the industrial sector, and subdued faring of the key service-sector proxy indicators. Besides, both businesses and consumers seem to remain in a belt-tightened mode, as highlighted by the recent consumer confidence survey reading.

For its part, even the central bank has refrained from providing its own forecast for real GDP growth for the ongoing fiscal. Forecasts are always wrong, they say, but such models do provide an insight into the expected long-term trends. Currently, the only other available independent GDP forecasts to speak of are from the IMF (FY20: 2.4% growth) and the Asian Development Bank (2.8%).

While IMF has made available its economic forecasts for Pakistan for next five years, long-term economic forecasting from Pakistani authorities is not publicly available. It may or may not be the case that SBP officials use scenario analyses in their private meetings, but those outside the government are unable to benefit from that expertise. As for Planning Commission, it is yet to release its forecasts under 12^th five-year plan. Meanwhile, brokerage houses also don’t seem to dabble in long-term economic forecasting.

Coming back to the question of 2020, at least the first half of it, which is the remainder of the ongoing fiscal, will likely see the fiscal status quo of limited development spending hold. The Q-block aims to run a tight ship in order to meet the IMF’s targets. However, not all cabinet members seem satisfied with the way the so-called macroeconomic adjustment is playing out among the constituents. It remains to be seen what the next budget brings to bear. Recovery may be here but “growth” still remains most-wanted.