Tuesday July 05, 2022

Pakistan set to achieve 6pc GDP growth this year

May 18, 2022

ISLAMABAD: Pakistan is all set to achieve GDP growth in the range of approximately 6 per cent for the current fiscal year mainly because of the improved contribution of industrial and services sectors.

Amid lingering differences between the Ministry of Finance and the Ministry of Planning over the measurement of provisional Gross Domestic Product (GDP) figures, the government is likely to calculate the GDP growth hovering in the range of 5.7 per cent to 6.2 per cent for the current fiscal year.

The country’s history of witnessing a boom and bust cycle is going to repeat as the county’s GDP growth ranges around 6 per cent and the macroeconomic imbalances on account of twin deficits such as budget deficit and current account deficit re-surfaced. The Pakistan Bureau of Statistics (PBS) has allegedly been pressurized to adopt a conservative approach, but it so far refused to accommodate the demand, arguing that if the methodology was changed, it would mar the credibility of the official data. One top official said the previous government had pressurized the PBS to bring changes in the price data to show less inflation, but it had refused to change the methodology for the collection of the pricing data.

Now again, the PBS should refuse to accept any pressures for data manipulations, said an official working with the Ministry of Finance. He argued that the data should be reflective of ground realities as no one would believe that the country was achieving a higher growth trajectory. But the official data and empirical evidence showed that whenever the country achieved higher GDP growth, it resulted in surfacing the twin deficits, so it was happening again.

Official sources said the government was projecting the budget deficit of over Rs 5 trillion and the current account deficit of $16-$17 billion. The Ministry of Finance’s Economic Advisory Wing has estimated that the provisional GDP growth might be touching 4.2 per cent for 2021-22. However, the Ministry of Planning estimated that the provisional GDP growth would definitely surpass 5.5 per cent. With the double digit growth of Large Scale Manufacturing (LSM), the possibility of restricting overall GDP growth to less than 5 percent seems impossible. In the aftermath of rebasing of national accounts from 2005-6 to 2015-16, the country’s GDP was Rs 55.8 trillion for the last fiscal year.

Now it is estimated that the size of the economy might touch Rs 63.8 trillion for the current fiscal year or it might cross it because the nominal growth (GDP growth plus inflation) will be gone up by around 19 to 20 per cent for the current fiscal year.