What grows?

Economic growth targets are never to be taken without a pinch of salt in Pakistan. Every government has a tendency to inflate their growth targets to build optimism and paint a picture that is rosier than reality. In his 2015-16 budget speech, Finance Minister Ishaq Dar promised that Pakistan’s economy would grow by 5.5 percent in the coming year. A year later, the growth rate has been confirmed to be 4.7 percent, much lower than even the revised target of 5 percent. The picture painted is a mixed one. Some sectors, such as industry and services, have grown beyond predictions – at 6.8 percent and 5.7 percent, respectively. The alarming thing, however, is that agricultural production actually fell by at least 0.19 percent against the predicted growth of 3.9 percent. Cotton production went into free fall after production went down by 27 percent. The impact was borne by the cotton ginning industry which fell by 21 percent. The output of other important crops fell by 7.18 percent with only wheat, livestock and forestry exhibiting growth. The highest growth was exhibited by the construction and small manufacturing sectors, which grew by 13.1 and 8.2 percent each. Political instability, terrorism and the electricity crisis are said to be the main hurdles the government faces. But these should have been factored in when the calculations were being made.

Finance Minister Ishaq Dar once again appears optimistic by predicting that Pakistan’s economy will grow by 7 percent next year. What we need is an admission of structural weaknesses in the economy instead of only relying on the narrative that the China-Pakistan Economic Corridor will lead to miracle growth. If the finance minister is to be believed, Pakistan is ready for an economic take-off – despite a crippling power and security crisis. In a global environment where low growth rates are predicted for the next decade, this would be remarkable. The reality may be much more sombre. In the year 2015-16, Pakistan saw low foreign investment, low bank lending and low public-sector spending. The economy continued to rely on loans and remittances to remain stable. This is why some economists have questioned the 4.7 percent economic growth rate, saying the rate gives a wrong sense of prosperity. Some have even said the true figures are closer to 3.5 percent. Even if the government’s figures are true, the state of the country’s agricultural sector, once considered the economy’s backbone, raises concerns about the overall health of the economy. The government may try to spin it differently but there are still serious concerns over Pakistan’s economic health that need to be tackled.