Is 3.94 percent GDP growth fudged?

From the last couple of days, majority of masses in Pakistan are discussing emotionally the 3.94 percent growth in GDP during the times of crisis. Every layman is talking on economic indicators based on their political attachment, not based on technical grounds. I have listened to many talks and also gone through the articles, but the majority are reacting according to their political affiliation. Data and empirics have their own behaviour and before talking on this aspect, there is a dire need to know about the behaviour of variables, environment, structure of the economy and even to compare it with some of the neighbours.

The other day, I was sitting in a barber’s shop and the barber argued it was not possible to show an exaggerated number of GDP growth when there was a lockdown and unemployment was increasing rapidly, and there was also increase in vulnerability and poverty. He thought that all these numbers were fudged and not in line with reality.

After the barbershop, I went to buy vegetables. While packing my purchases, the vendor said to me, “You know our government performance is exponentially increasing and it is the result of leadership competency and soon you will see the credibility of our economy by expanding employment opportunities for everyone which will further trickle down the reduction in poverty and wellbeing of the general public.” Such sort of discussion is everywhere because we have made everything a political stunt, irrespective of economic, societal, environmental or religious technicalities.

As far as the GDP growth of 3.94 percent is concerned, technically it is not too exaggerated, because the National Accounts Committee (NAC) measures GDP annually by comparing it with previous year performance based on the data and team of experts. Everyone knows that last financial year was stuck in a lockdown which had minimized all sorts of economic activities and reduced the GDP to minus 0.4 percent in 2019-2020. Due to this low GDP growth of the previous year, currently our economic activities have recovered and the majority of the sectors are working as per routine. Secondly, our agriculture sector showed a bumper crop for this year and it is because of a favorable environment. Another major factor is expansion in the informal sector activities during the pandemic which has acted on the economy positively. These are the basic points and by comparing last year’s activities, we have recovered in almost all the sectors. Those are contributing to the GDP. The critical point for the general public in this number is that it is not shown in poverty reduction, increase in purchasing power, educational opportunities, health outcome and satisfaction of life and we can call this phenomenon as “Growth Without Development” which requires some new debates. When we consider growth and development as interchangeable concepts then it looks tough to understand the 3.94 percent in the current scenario.  On the other hand, we have to differentiate the concepts of growth and development.

After this sudden breakthrough, there is dire need to initiate some strategies for the trickle down of the benefits of economic growth to the masses in terms of price stability, poverty alleviation, skill development for the youth and employment generation for sustained and inclusive development of Pakistan.

If we compare 3.94 percent GDP growth of Pakistan with some neighboring countries then there is 11 percent GDP growth for China, 8 percent for India and 7 percent for Bangladesh for the same period, caused by a low GDP base. We are very much behind the neighbours but their people believe in the state that it is a technical game and people are only concerned with what happened with poverty, inequality, employment and quality of life. Unluckily, we are masters in converting every economic (GDP measurement), social (out-of-school children), health (vaccination) and religious (moonsighting) issue into the basket of politics, which is one of the leading factors behind our instability and backwardness from the last many decades.

We have the projections of GDP growth from 1.5 to 3 percent from various financial institutions based on the covid-19 situation and IMF/World Bank forecast as per their circumstances, but our people are not taking the state-based SOPs seriously. Pakistani people didn’t follow government instructions throughout the crisis and kept up the economic, social and religious activities informally which have saved the employment of a majority, and led to economic recovery and high growth rate as compared with previous year. After this sudden breakthrough, there is dire need to initiate some strategies for the trickle down of the benefits of economic growth to the masses in terms of price stability, poverty alleviation, skill development for the youth and employment generation for sustained and inclusive development of Pakistan.