Islamabad: Pakistan’s economic growth has contracted to $341.5 billion, causing a decline in its per capita income to $1,568 in the previous fiscal year. This contraction was due to minimal economic growth and currency devaluation. Amidst this scenario, a controversy has emerged regarding the verified GDP growth rate.
According to provisional estimates approved by the National Accounts Committee (NAC) one day prior, the economy experienced a 9% contraction, resulting in a $34 billion decrease. Additionally, per capita income decreased by 11.2%, or $198.
Recent reports indicate that the Pakistan Bureau of Statistics (PBS) management encountered significant pressure to alter the economic growth rate, projected initially to be a negative 0.5% for the previous fiscal year ending June 30. This information comes from government sources and newly obtained details.
Sources indicated that PBS management has reportedly given in to pressure and will display a growth rate of 0.3%, which is said to be nominally positive. However, the figure was subsequently stamped by NAC.
Post-Disaster Needs Assessment Reports
According to the Post-Disaster Needs Assessment (PDNA) report on the 2022 floods, the government has reported that approximately one million livestock are believed to have perished.
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Other sources contradicted the PBS report, calling into question the credibility of both the government and PBS. For example, PBS reported that only approximately 200,000 animals had perished during the summer floods.
In a surprising turn of events, the National Agriculture Commission (NAC) has approved a 3.8% growth rate for livestock. This figure has caught many off guard, surpassing the pre-flood growth rate of 2.3%. The credibility of the official economic growth rate of 0.29%, approved by the NAC on Wednesday, has been questioned due to a glaring contradiction.
According to sources, the country’s national data collecting agency, PBS, made a hasty decision to change the growth rate from negative to positive. This decision was made without a proper “working paper” being presented for approval by the NAC, marking the first time this has happened.
In a recent development, sources indicated that the NAC had approved the provisional economic growth rate. However, this decision was made based on a single presentation and, notably, without the working paper on the table.
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Economy Shrinks by 9%
During the outgoing fiscal year, the size of the economy and per capita income both experienced a decline in dollar terms, despite other factors. According to recent reports, the economy has experienced a decrease in size, dropping to $341.5 billion. The dropping represents a 9% decrease, equivalent to $33.9 billion less than the previous year.
Thanks to a record inflation rate in the country, the size of the economy in rupee terms has reached nearly Rs85 trillion in 2022-23, which is about Rs18 trillion higher than the previous fiscal year.
According to recent reports, the per capita income has experienced a decline from $1,766 to $1,568 in the last fiscal year. This represents a reduction of $198 or 11.2% per person. On the other hand, according to recent data, there has been a significant increase in per capita income in India. In fact, in rupee terms, per capita income has risen from Rs313,337 in 2021-22 to Rs388,755 in 2022-23. This represents a one-fourth increase, which can be attributed to inflation.
Pakistan Bureau of Statistics Suggests
Dr. Naeem ul Haq, the chief statistician at PBS, said there was no pressure on him to manipulate the figures. However, when questioned about the confirmation of the PBS producing working papers for NAC that indicated a negative 0.5% GDP growth for FY2022-23 but had not yet shared the report with the committee, he refused to answer.
PBS asked why Dr. Naeem did not present the working paper at the NAC meeting. However, he did not respond. PBS asked to comment and asked whether the government had threatened him to alter the number or face repercussions. According to Dr. Naeem, the statement made needed to be corrected.
According to sources from both PBS and the Ministry of Planning, PBS management was pressured to alter their figures.
A senior government official reported that the Ministry of Finance did not pressure the PBS. Therefore, according to the individual, the chief statistician should assume responsibility for the entire exercise.
According to another government official accused of pressuring the PBS, the Ministry of Finance has denied any interference in the organization’s operations, stating that it only provided data to the PBS.
The agriculture, food, livestock, and fisheries sectors sustained losses amounting to $3.7 billion, as reported by the PDNA report.
The reduction in food harvests and limited supply of livestock resulting from these losses have an adverse impact on the local food processing and slaughtering industries.
Additionally, the report anticipates a decrease of 0.7% of FY22 GDP in the industry sector value added. In contrast, the fishery sector experienced a growth of 1.44% according to the National Accounts Committee (NAC), surpassing the 0.4% growth observed in the previous year. Furthermore, it is worth noting that the floods did not cause any damage to this sector during the last year
Decline in the Industrial Sector
Despite a decline in the industrial sector, the electricity, gas, and water supply sectors have exhibited a growth rate of over 6%. On the other hand, according to sources, the construction sector has experienced a contraction of 5.5%, which is reportedly lower than the initial estimate made by PBS.
According to government officials, the education sector experienced a growth rate of 10.4%, marking a historic high. The previous record had a growth rate of 3.5%.
Reportedly, health services have experienced a growth of 8.5%, surpassing the 6.2% growth rate observed during the Covid-19 pandemic. In addition, recent data indicate that the increase in other services has exceeded that of last year, which is unusual as most of these services typically have a fixed growth rate based on the previous year.
The agriculture sector grew 1.6% despite a 41.1% decrease in cotton production, a 23% reduction in cotton ginning, a mere 2.8% growth in sugarcane, and a 21.5% decrease in rice output.
According to sources, 2.94% industrial sector has contracted. This is reportedly lower than the previously estimated negative output. According to recent reports, imports, essential crops, and manufacturing sectors have significantly contracted. However, the government has reported a negative growth of only 4.5% in the wholesale and retail sectors.