Pakistan’s economy grew at a pace of 3.1% in the outgoing financial year, an independent think tank claimed the other day rebutting the statement by the Finance Minister Ishaq Dar that the GDP growth rate was 4.7%.
The claim by the Social Policy and Development Centre (SPDC) has dealt a second major blow to the credibility of the Pakistan Bureau of Statistics (PBS) in less than a week. Earlier, the Policy Research Institute of Market Economy showed in a report that the BPS was understating the inflation rate.
“GDP growth rate is 3.1%, not 4.7%” in the fiscal year 2015-16, according to the SPDC report. Former interim prime minister and world-renowned economist Moeen Qureshi is the patron of SPDC, while former finance secretary Saeed Qureshi and former State Bank governor Dr Ishrat Husain are on its board.
While revealing the Economic Survey of Pakistan for 2015-16, Ishaq Dar boasted the GDP growth at the rate of 4.7%, which was the highest in the last eight years. Conversely, the SPDC claims the provisional growth rate was 3.1% — the lowest rate in seven years.
The SPDC said it was the third consecutive year that the PBS exaggerated the GDP growth rate. In June 2014, the PBS brought down the relatively high growth rate achieved in 2011-12 from 4.4% to 3.8%. “This was done to demonstrate that the GDP growth rate of 4% in 2013-14 was the highest in the last six years,” according to the report.
According to the SPDC estimates, the growth rate in 2015-16 had been overstated in 10 out of the 18 sectors of the economy. “Almost 60% of the overstatement is in the services sector.”
Against the official claim of only 0.2% negative growth in agriculture, the sector actually contracted 2%, it said. Similarly, the industry grew at a pace of 5.5% against the government’s claim of 6.8%. Moreover, the SPDC stated that the services sector’s growth was 4.1%, implying a GDP growth rate in 2015-16 of 3.1% against the official claim of 5.7%.
The agriculture sector is important for Pakistan not only because it accounts directly for 21% of GDP but also 60% of the manufacturing is agro-based and over 40% of trading and transport is of agricultural products, said the SPDC.
The think tank noted that electricity generation increased by only 2% and with this little increase in output, the economy cannot grow at the rate of 4.7%.
Finance Minister Dar is increasingly coming under pressure to reform the PBS. He admitted during a recent news conference that there were some legitimate questions about the working of the PBS because nobody ever raised such questions about the working of the Securities and Exchange Commission of Pakistan and State Bank of Pakistan.