The National Accounts Committee’s GDP projection for the current fiscal year of 2020-2021 seems as self-serving as it is convenient. At 3.94 percent, it outperformed the estimates not just of the International Monetary Fund and the World Bank, of between 1.3 and 1.5 percent, but of government bodies like the State Bank of Pakistan, of 3 percent, and of the Finance Ministry itself, which was slightly lower. After the previous year, 2019-2020, when growth was a pandemic-stunted -0.47 percent, this would be a rebound, if only it was true.
The Prime Minister crowed over the news, ascribing it to his government’s efficient management. He did not explain why it sacked two Finance Ministers recently. It would be puerile to expect people hard-pressed to make ends meet in the face of spiraling prices to ignore their plight on the basis of these figures. If the NAC has been made to cook up the figures, or at least massage them a little, it will have no effect other than making Mr Khan think that progress is being made. The problem is that the figures underlying the projection do not add up. The overall projection is based on healthy growth in agriculture and large-scale manufacturing, and the latter almost exclusively on growth in automobile production. Agricultural growth has not really taken place, and a major crop, cotton, has worsened.
This has created problems in the manufacturing sector, but there too the NAC has sounded an optimistic note without sufficient justification. There does not seem to have been sufficient provision made for the expected collapse in foreign remittances, which have been at record levels this year, and thus have bolstered the growth figure so far this year. However, if that figure does not sustain itself, and if there has to be a current account deficit, the growth figure itself will not sustain itself. Pakistan’s exports have so far not recovered, and will not do so until the world’s largest economies recover and start buying again. There are reasons why the NAC figure is being doubted so vociferously by the opposition, and the government should realise that by trying to make the figures fit its own La-La Land narrative, it is merely increasing the credibility gap rather than doing itself any favours.
