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Monday February 26, 2024

Incredible growth?

By Editorial Board
May 26, 2023

The provisional GDP growth figure put out by the much-rescheduled National Accounts Committee (NAC) meeting comes as a confirmation of how tough the economy has been over the outgoing fiscal for households and businesses alike. For a country with a population growth rate of over 2.0 per cent, 0.29 per cent GDP growth is an effective contraction, and in all probability the number itself will move into negative territory by the time the accounts are finalized. It also comes as a reminder that, although most of us urbanites blinkered by the daily grind have moved on, our agrarian economy continues to reel under the impact of last monsoon’s cataclysmic flooding, posting a provisional figure of 1.55 per cent growth over FY2022-23 despite a bumper wheat harvest.

The number comes as further confirmation that an economy like ours cannot squeeze the external sector and hope to score overall growth. The brakes Finance Minister Ishaq Dar and his team applied to achieve import compression ended up squashing just about every sector of the domestic economy, sending industrial growth into negative territory (-2.94 per cent) and restricting the services sector growth to less than a percentage point (0.86 per cent). The government will no doubt hang the blame for this at the door of the IMF, to which one can only say the Fund was not the finance minister.

Finally, the number comes as further confirmation that a house divided against itself politically cannot hope to prosper. The government will no doubt draw out attention to the hardball tactics used by former prime minister Imran Khan to keep the political environment simmering, virtually ensuring markets remain jittery, to which one can say Imran is not the prime minister, and it has been this way for over a year now. Dar and his team would also like to shift blame for this dismal performance to the previous government for scuttling the economy on its way out. On the other hand, if an economy stays scuttled more than a year after Imran Khan’s ouster from power, you may as well hand it over to him. Achieving political stability will remain the responsibility of the government and any effort to wriggle out of that responsibility is tantamount to dereliction of duty.

The long and short of it is that it is time for Prime Minister Shahbaz Sharif and his economy czar Ishaq Dar to take responsibility for the shape our economy is in today, and come up with some solid answers in short order. They must realize first and foremost that no amount of spin-doctoring can undo or mitigate the unqualified mess the country is in. We can see that the nominally positive provisional growth number put out by the government hides some interesting statistical gimmickry. Consider, for instance, the double-digit growth achieved by the education sector (10.44 per cent), or the 8.49 per cent growth posted by human health and social work-related activities. While we would love to see that kind of progress in those vital sectors, there is no getting away from the fact that within the context of our overall economic situation, these impressive numbers come across as anomalies, probably introduced to turn the negative overall growth into positive.

At the receiving end of this tough economy is the regular Pakistani. The data released by the government has no numbers on poverty and unemployment, but there should be no doubt that the squeeze this dismal growth rate puts on the daily life of a household is magnified manifold by the roaring inflation, runaway unemployment, and massive erosion of purchasing power. The government must mend its ways and take corrective measures immediately because the heady mix of political instability and tough economy has turned the country into a powder keg of discontent, ready to blow up at the slightest spark.