Friday, May 26, 2023
The National Accounts Committee (NAC) has approved a provisional GDP growth rate of 0.29% for the fiscal year 2022-23 — one of the lowest growth rates in recent memory, or throughout the country’s history.
However, even this dismal number looks freshly cooked, sprinkled with unreasonable and unsubstantiated assumptions, while having weak statistical or even logical foundations. The GDP growth calculation exercise in the country has been marred by incompetence and stale data. An industrial census has not taken place for many years now, while a census that counts small businesses too has not taken place for almost two decades.
Similarly, a livestock census has not been completed since 2006. In a scenario where data is stale for more than a decade in many cases, and growth rates are largely a function of linear extrapolation, not much credence can be attributed to any GDP growth numbers. The latest available numbers have been marred with logical inconsistencies.
As an example, livestock has a weight of almost 63% in the agricultural component of GDP (or 14.4% of the total), and for the outgoing year of 2022-23, it recorded a growth of 3.78%, which is its highest growth rate in nine years. In the background of the megafloods that flooded a significant area of the country only a few months back, resulting in insignificant livestock loss, such a significant growth spurt cannot be reasonably explained.
Similarly, large scale-manufacturing exhibited a contraction of 7.98%, as industries across the board shut down due to the unavailability of raw materials, and supply chain distortions due to irresponsible policymaking by the government that started rationing the availability of foreign currency, instead of fixing problems and undergoing necessary structural reforms.
Despite a contraction in large-scale manufacturing, as per the latest numbers, small-scale manufacturing actually grew by 9.03%, which simply does not make any sense. Small-scale manufacturing essentially comprises small-and-medium enterprises (SMEs) developing intermediary goods for utilisation by larger industries.
A contraction in large industries cannot simply lead to growth in smaller industries, as they have also seen their supply chains break down. In a scenario where the most recent survey of small-scale industries was almost two decades back, any numbers underlying the same should not even be taken with a pinch of salt.
In the numbers released, the economic segment of slaughtering is estimated to have an output of Rs500 billion, or almost 60% of small-scale manufacturing.
Slaughtering exhibited a growth of 6% during the last year. It is fairly obvious that a massive increase in the price of protein may have actually led to reduced consumption of protein, and thereby a contraction in the slaughtering segment — but somehow the slaughtering segment is booming. What is being slaughtered though are the dreams and hopes of the people.
Another anomaly is the growth of 6% in the case of electricity generation and distribution. Electricity generation for ten months of the outgoing fiscal year has contracted by 10%. An economy, which has one of the highest population growth rates in the world, saw its electricity consumption contract significantly.
Despite such contraction, the GDP growth figures consider a growth of 6% in the case of electricity generation and distribution. This makes absolutely no sense and is devoid of reality.
Pakistan’s economy effectively contracted during 2022-23, making it one of the worst economic years, particularly after considering the context of a rapidly growing population. The inability of the statistical office, or any relevant agencies, to be more serious with numbers over the years has led to a point where statistics are being fudged to an extent that is disappointing.
It is depressing how even dismal numbers such as those being released should be taken with a pinch of salt, because the real numbers may actually be much worse.
The writer is an independent macroeconomist.
Disclaimer: The viewpoints expressed in this piece are the writer's own and don't necessarily reflect Geo.tv's editorial policy.