State of economic growth

Notch above Afghanistan, at least

There continues to be a clear divergence between our own economic managers’ take on the state of the economy and the analyses of prominent international financial institutions (IFIs) like the Fund (IMF), World Bank, and Asian Development Bank (ADB). And now that the World Bank has once again confirmed slow growth in the outgoing fiscal – contrary to regional figures, which are leading world growth – it will be interesting to see the finance ministry’s spin as the budget nears. The Bank, with its expectation of 4.4 percent annual growth for Pakistan, seemed in sync with IMF and ADB projections, which settled around 4.3 percent.

This is where the numbers become interesting. The finance minister, whenever he waxes eloquent about progress under his watch, does not mention that we are at the bottom of the fastest growing region in the world. The comparison with India, especially, is sobering because the eastern neighbour is on track to achieving 7.5 percent growth. There is still some silver lining on the cloud, though, because we remain a ‘notch above Afghanistan’ at least. Yet that bit of good news is likely to be short-lived as well since Kabul is expected to double this year’s target of 2.5 percent next year, while Pakistan is not likely to go beyond 4.6 percent in the following fiscal either.

Unfortunately, if PML-N’s past record is any guide, the party will now mobilise its mouthpieces to project the usual all-is-well scenario. Remember how Marvi Memon said economic fundamentals were “superb” going into the dharna logjam? If a similar response is resorted to there is little sign of real progress. It is only when the ruling party admits policy faults that it will be able to shift gears. So far it has pursued a lopsided economic model which has drawn criticism for what has been called a ‘priority deficit’. Mega projects and motorways are good things, but only when lesser ‘structural’ essentials have been dealt with. It is little surprise that so far the government’s biggest economic successes have come from a dubious exogenous injection and an international fall in oil prices. That is hardly anything to write home about.