The government has forecast an ambitious target of 3.94% GDP growth rate this fiscal year maintaining that the economy has performed exceptionally well and all economic indicators have shown a positive trend amid the COVID-19 pandemic.
The growth figures have come as surprise as the State Bank of Pakistan (SBP) had estimated GDP growth at 3% and the finance ministry’s growth was slighter lower. The IMF and World Bank’s projection was between 1.3-1.5%. All three economic sectors have witnessed upward growth. The services sector shrunk due to the pandemic but still posted a growth of 4.43%. The agriculture sector posted 2.77% growth, while industrial output grew 3.57%.
The prime minister said the higher GDP growth reflects the success of the government’s economic policies while managing the pandemic. The National Accounts Committee (NAC) had approved the provisional estimates which even caught the SBP and Finance Ministry off guard as the economy has contracted 0.5% last fiscal year. However, the growth forecast has defied all gloomy predictions and could end our economic woes.
This has given fodder to the opposition to renew its criticism of the government’s economic policies and claims that the figures were exaggerated. The PML-N alleged that the government lowered the population size to misrepresent its economic performance. The critics claim that at the end of PML-N’s tenure, the economic growth rate was 5.5% and the size of the economy was $313 billion – a figure that the PTI could not touch even after three years.
The federal ministers have come up with a string of justifications to prove the authenticity of the data. Finance Minister Shaukat Tarin said Pakistan witnessed a strong V-shaped growth despite the tough IMF programme necessitated by unsustainable current account deficit and declining foreign currency reserves besides the pandemic. It will only be a matter of weeks before the actual figures are known when the budget is presented.
The finance minister said there was a need to pursue sustainable and inclusive economic growth for everyone. Moreover, the figure for the next year is expected to even higher at 6.6%. These are more than fudged figures and while we may not accept the government claims, the real improvement in the economic situation will show the government’s performance.
