PTI government is celebrating the news of 3.94% growth rate of Pakistani economy during the financial year 2020-21. The projected growth rate of 3.94% has beaten all the predictions including the State Bank of Pakistan.
While the opposition is continue to cast doubts on the projected growth rate. For them this figure of 3.84% growth is not realistic and seems inflated. The opposition is pointing to the fact that last year Pakistan’s economy growth rate was in negative. The government provided the figure of -0.4%. While IMF projected negative -1.5 growth rate for last financial year.
The government seems upbeat about this better growth rate than the predictions. The IMF and World Bank predicted the 2% growth rate during this financial year. The PTI government was expecting the growth rate around 3%. But growth rate suddenly jumped to 4%.
Many economists are scrutinising with a fair degree of disbelief the projected growth rate of nearly 4 percent for the outgoing year. Renowned economist like Dr Hafeez Pasha doubts the figures calculated by National Accounts Committee.
The National Accounts Committee (NAC), a body having representation of all the stakeholders, including provincial officials of crop reporting services, bureau of statistics and senior economists has estimated that economy will grow at 3.94 percent in the year 2020-21.
Finance minister Shaukat Tarin has claimed that the “economic growth has appeared along with stabilization due to the government’s focus on certain targeted sectors such as housing, agriculture, industry and exports.
The projection of 3.94 percent GDP growth rate which provides hope that if we move forward towards growth then maybe the next year we might have 5pc growth and more than 6pc the next year after that.”
It is good news for the government as last year Pakistani economy experienced first negative growth in the history. Former finance minister and current Energy minister, Hammad Azhar, explained that how the PTI government has achieved this high growth rate despite the disruptions caused by coronavirus pandemic.
According to Hammad Azhar, some sectors of economy performed much better than earlier predicted. The agriculture sector and industrial sector has performed better. Large-scale manufacturing grew by 9% during the first nine months of the current year; monthly average export remained at over $2bn for seven consecutive months.
Foreign exchange reserves touched $23bn, the highest in five years since December 2016; remittances witnessed a growth of 39 percent in the current year in July-April to $24.2 billion with monthly average inflow of over $2 billion for 11 consecutive months; the rupee appreciated by 9 percent since August 2020 from Rs168 to Rs153 and rated as the best performing currency in the last three months. The current account had a surplus of $959 million in July-Mar 2021 and; sale of cement and automobiles increased during the period under review while better crop prices benefitted the farmers’ community.
The former federal finance secretary and current State Minister for Finance and Revenue Dr Waqar Masood Khan defended the figures of 3.94% of projected growth. He said the earlier SBP projection of 3 percent growth of GDP was based on old crop production figures.
The revised figures of crops especially over 27m production of wheat was shared with the meeting’s participants; the provincial crop reporting services of agriculture departments shared the updated figures with the NAC meeting. “No one was expecting the highest-ever growth figures in wheat,” he said as if quoting the clincher.
About the estimates of IMF and World Bank, Dr Waqar said that multilateral donors keep growth rates on the lower side. According to him, in the last IMF programme growth rate was projected at 1.5pc to 2pc but the economy actually grew at 4pc in the year 2013.
He said that multilateral donors don’t have their own data and rely on the data provided by government of Pakistan.
Federal Board of Revenue posted a growth of 6pc in the first six months while it grew at 16pc in the four months of the second half. The growth in revenue collection is showing that economic activities are going on in the country.”
As expected, the projected ‘unexpected’ rate of economic growth in the current fiscal year has triggered a heated debate in the country, with the government coming up with a string of justifications to prove authenticity of the data involved and the main opposition leader expressing doubts over the calculations of government’s economic team and the other detractors of the government rejecting the figures out of hand as ‘fudged’.
When the year 2020-21 began, the IMF had estimated GDP growth at 1 percent and SBP at 2 percent; then SBP improved its forecast to 3 percent and the IMF to 1.5 percent. The improvement in projections came with the arrival of fresh data.
Dr Ashfaq Hasan Khan, former Economic Advisor in Prime Minister Shaukat Aziz’s government, a bitter critic of the present government’s economic policies holds the same view as Dr Waqar Masood Khan about the growth figures that the IMF had estimated for the outgoing year, but he said the projected rate for the 2020-2021 fiscal year has been calculated on the basis of a very low base and that was why in his opinion the NAC calculations show a fairly healthy growth rate.
He said in order to get a more realistic figure for the same, one could add the growth rate of the last year which was almost negative with the one projected for the current fiscal and average out the two which would give an approximately more authentic growth rate of about 1.5 to 2 percent for the outgoing year.
He said he had estimated the growth rate for the outgoing year at around 3 percent because of the failure of the cotton crop. He appeared to be pleasantly surprised by the reports of bumper wheat crop and hoped the estimates are genuine because in case they are not, not only the government would face the ignominy of revising downward the growth rate but the country may also face the possibility of importing wheat in order to bridge the ensuing yawning gap between availability and the actual requirement.
The primary evidence for an optimistic projection is the acceleration in the growth rate of the large-scale manufacturing sector, buoyancy in cement sales and petroleum products and recovery in automobile sales plus signs of recovery in agriculture sector.
There might be some inflated figures in the projection but one thing is clear that the economy has started to grow at a reasonable pace after two years of hardly any growth. It is not possible to create jobs, reduce poverty and increase incomes of poor people without a higher rate of economic growth.
PTI needs to focus on the employment, reducing poverty and increasing wages in the next budget. PTI government also needs to bring down the high inflation which is causing lot of problems to ordinary Pakistanis.
Your email address will not be published. Required fields are marked *