The government’s economic growth projection of 3.94pc for the current fiscal year is shocking for most experts and the opposition. Even if the estimate is right, it will not be enough to meet the basic needs of the rising number of people, who have been crushed by high inflation and unemployment rates.
According to the government, Pakistan’s economy performed beyond expectations with all major macroeconomic indicators showing positive trends amid the Covid-19 pandemic, resulting in a 3.94pc economic growth rate this fiscal year, compared to a revised negative 0.47pc in 2019-20. The growth rate is not only far better than the government’s own estimates, but also international financial institutions. The State Bank of Pakistan (SBP) had estimated GDP growth at 3pc, while the finance ministry’s projection was 2.5pc. On the other hand, the International Monetary Fund and the World Bank had estimated it between 1.3pc and 1.5pc. No doubt, most experts are not willing to accept the new government figures.
According to the government, the agriculture and services sectors have spurred growth. The services sector grew 4.43pc, the agriculture sector posted a 2.77pc growth, while industrial output grew 3.57pc. On the other hand, Pakistan’s trade deficit has widened by 20.1pc to $23.562 billion during the first 10 months (July-April) of the current fiscal year, from $19.613 billion in the corresponding period of 2019-20. Exports grew by $2.471 billion or 13.4pc to $20.879 billion during July-April 2020-21, as compared to $18.408 billion in the same period of 2019-20. However, imports posted a growth of $6.420 billion or 16.9pc to $44.441 billion during the first 10 months of the current fiscal year as compared to $38.021 billion in the same period of 2019-20. Pakistan’s exports grew 129pc to $2.191 billion in April 2021, as compared to $957 million in April 2020. Imports have posted a growth of 53.6pc to $4.922 billion in April 2021, against $3.204 billion in the corresponding month of FY 2020. The trade deficit also posted a growth of 21.5pc to $ 2.731 billion in April 2021, from $2.247 billion in April 2020, indicating a difference of $484 million.
Foreign direct investment (FDI) fell by over 32pc during the 10 months of the current fiscal year compared to the same period in the previous financial year. However, data released by the State Bank of Pakistan showed that the inflow during April 2021 had increased compared to the same month of the last fiscal year.
In the situation, experts and the opposition are skeptical about the new statistics, which paint a rosy picture of the economy. The opposition Pakistan Muslim League-Nawaz (PML-N) has alleged that the PTI government has fudged figures, including those about the population of Pakistan, to lie about its economic performance. It said the top three indicators of any economy in the world were its GDP growth, inflation rate and budget deficit. “The PTI government has failed at all three indicators. The government has secured a loan equal to 50pc of what Pakistan had obtained since it came into being. While calculating the GDP growth, the PTI took Pakistan’s population at 210.10 million, whereas the actual population is 220.80m, according to the 2017 census, which has increased by 2.4pc since then,” it said.
According to Finance Minister Shaukat Tarin, the economy needs to expand by 5pc next year. “That’s the bare minimum we need for a country this size. There are almost 110 million youths. We need two million jobs every year. If we do not go into growth mode, we will have a major crisis on the streets,” he warned. The revised estimates show that the economy may not grow at the required pace to meet the requirements of the country and its people. Even if it is achieved, there will be the question about its sustainability. The last PML-N government had achieved a high growth rate, but it still failed to address national issues. All fiscal indicators of the country had worsened when the PTI came to power. It shows Pakistan’s economy has structural weaknesses, which worsen after a few years in every government.
The government plans to boost spending on large infrastructure projects by 40pc to create jobs and foster productivity. It will earmark Rs900 billion for development expenditure in the budget. It is targeting about Rs6 trillion in revenues next year. The plans are necessary for an economic revival of the country. However, what is crushing the common people is high inflation. April saw a double-digit increase in prices of consumer items as inflation edged up to 11.1pc from 9.1pc in March, according to the government’s own data. Inflation entered a double-digit figure after a gap of 12 months though it fell to 5.7pc in January 2021. It was mainly driven by double-digit growth in food inflation in both urban and rural areas. On a month-on-month basis, inflation increased by 1pc, mainly due to an increase in prices of chicken, cooking oil/ghee, sugar, wheat, and pulses for the end consumers. At the same time, non-food inflation has steadily been on the rise for the past few months due to higher energy prices. The average Consumer Price Index in 10 months — between July and April — eased from 11.22pc last year to 8.62pc this year. Ramazan saw an accelerated growth in prices of vegetables, fruit, chicken and oil.
The situation has reached a point, where people think the government cannot provide relief to them. They have expressed their anger at the government in recent by-polls. It is a fact that the government has failed to check prices in its three years. It resorted to rhetoric only. People need practical steps from the government to save them from sugar, wheat, flour and other mafias.