Unraveling the Controversy: Pakistan’s Economic Figures and the Battle for Credibility
The accuracy and reliability of economic figures play a crucial role in understanding a country’s economic health. However, Pakistan’s recent economic data has been marred by controversy, with allegations of manipulation and pressure on the Pakistan Bureau of Statistics (PBS) to change figures.
Pakistan’s economy witnessed a significant downturn in terms of GDP size in dollars, growth rate, and per capita income during the outgoing fiscal year 2022-23, marking the slowest expansion in overall output in the country over the past four years. This decline in Pakistan’s economy during 2022-23 indicates substantial mismanagement by the coalition government. The economy grew by only 0.29% in FY23, a sharp decline from the previous year’s rapid 6.1% growth achieved under the PTI government.
The size of the economy in dollar terms decreased to $341.554 billion in FY23 from $375.449 billion in FY22. These figures, approved by the National Accounts Committee (NAC), were subsequently released to the media. The decrease in the economy’s size can be attributed to the highest-ever depreciation of the rupee in any given year. Per capita income in dollar terms fell to $1,568 in FY23 from $1,766 in the previous year and $1,677 in FY21. This suggests a deterioration in the standard of living and well-being across almost all segments of society, with a sharp decline in personal incomes.
This decline may lead to a decrease in disposable income, limiting individuals’ ability to afford goods and services, save, or invest. The provisional growth rate of GDP for the fiscal year 2022-23 is estimated at 0.29%. The growth rates for the agricultural, industrial, and services sectors have been projected at 1.55%, -2.94%, and 0.86%, respectively. These estimates shed light on the performance and dynamics of the economy, highlighting sector-specific trends and their potential impact on overall economic growth. The provisional growth in the agricultural sector can be attributed to notable increases in key crop yields. Wheat yields experienced a significant surge of 5.4%, reaching 27.634 million tonnes compared to the previous year’s 26.208 million tonnes. Similarly, sugarcane production saw a rise of 2.8%, with output increasing from 88.65 million tonnes to 91.11 million tonnes. Additionally, maize yields witnessed a substantial growth of 6.9%, climbing from 9.52 million tonnes to 10.183 million tonnes.
However, there was a significant decline in the production of cotton crops, which dropped by 41% from 8.33 million bales to 4.91 million bales. Similarly, rice production also experienced a decline of 21.5%, falling from 9.32 million tonnes to 7.32 million tonnes. Besides, several other crops have shown a modest growth rate of 0.23%. The industrial sector has experienced a provisional negative growth rate of 2.94%, with large-scale manufacturing (LSM) witnessing a negative growth rate of 7.98%. The services sector has experienced a relatively sluggish growth rate of 0.86%.
Pakistan’s economy has contracted, leading to a reduction in its size to $341.5 billion, and a decline in per capita income to $1,568 during the outgoing fiscal year. This decline can be attributed to sluggish economic growth and currency devaluation. However, there is a dispute regarding the official GDP growth figure.
Provisional estimates approved by the National Accounts Committee (NAC) indicate that the economy shrank by $34 billion or 9%, and per capita income decreased by $198 or 11.2%. Media reports and fresh details suggest that the Pakistan Bureau of Statistics (PBS) management could have faced pressure to change the initially estimated negative growth rate of 0.5% for the fiscal year.
The credibility of both the government and the PBS has been called into question, as the number of livestock lost during the floods contradicted the government’s claims in the Post-Disaster Needs Assessment (PDNA) report. The NAC’s approval of a 3.8% growth rate in the livestock sector, which is higher than the pre-flood period, further raises doubts about the credibility of the officially reported economic growth rate of 0.29%. The decision to change from a negative to a positive growth rate appears to have been made hastily, and the PBS failed to present a proper working paper for NAC approval. Despite this, the economy’s size and per capita income have decreased in dollar terms during the fiscal year, with the economy shrinking by 9% or $33.9 billion.
In rupee terms, the size of the economy reached nearly Rs85 trillion in 2022-23, an increase of about Rs18 trillion compared to the previous fiscal year, primarily due to high inflation. Similarly, per capita income declined from $1,766 to $1,568 in dollar terms, a reduction of $198 or 11.2% per person. In rupee terms, per capita income increased from Rs313,337 to Rs388,755 in 2022-23, driven by inflation.
According to the PDNA report, the agriculture, food, livestock, and fisheries sectors incurred losses of $3.7 billion. The report further highlighted that these losses would negatively impact local food processing and slaughtering industries due to expected reductions in food harvests and a decreased supply of livestock.
As a result, the value added in the industrial sector is projected to shrink by 0.7% of the GDP of FY22, as per the report. However, the NAC approved a growth rate of 1.44% for the fishery sector, compared to the previous year’s 0.4% growth when the floods had not caused damage to this sector.
Despite a decline in the industrial sector, the electricity, gas, and water supply sectors show growth of over 6%. The construction sector contraction is reported at 5.5%, which is lower than the initial estimate by the PBS, according to sources. The government claims that the education sector witnessed growth of 10.4%, the highest ever recorded, surpassing the previous highest growth rate of 3.5% in 2017-18.
Similarly, health services are said to have grown by 8.5%, exceeding the 6.2% growth rate observed during the Covid-19 pandemic when funds were diverted to this sector. The growth in other service sectors is also reported higher than the previous year, which is considered anomalous as most of them have fixed growth rates based on the previous year.
Overall, the agriculture sector is estimated to have grown by 1.6%, despite a significant decrease in cotton production by 41.1%, a 23% reduction in cotton ginning, only a 2.8% increase in sugarcane production, and a 21.5% decrease in rice output. The industrial sector contraction is reported at 2.94%, which is lower than the initially estimated negative output. Although imports, important crops, and manufacturing sectors experienced significant contractions, the government has reported only a 4.5% negative growth rate in the wholesale and retail sectors.
The discrepancies and pressures surrounding Pakistan’s economic figures have raised concerns about the integrity and accuracy of the reported data. The alleged manipulation and lack of transparency have cast doubt on the government’s ability to provide reliable economic information, impacting the trust of both domestic and international stakeholders. To ensure credibility and foster confidence in the economic data, it is essential for the government and relevant authorities to conduct thorough investigations, address the allegations, and establish robust mechanisms for accurate data collection and reporting.
In an era where accurate economic information is vital for informed decision-making and policy formulation, Pakistan must prioritize transparency, independence, and integrity in its statistical processes. By doing so, the country can rebuild trust, foster investor confidence, and lay a solid foundation for sustainable economic growth.