Fahad Khan 2
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ISLAMABAD: An independent think tank has accused the Pakistan Bureau of Statistics (PBS) of inflating the growth rate for the outgoing fiscal year to suit its purposes, casting doubts over the credibility of the national statistics agency again.
According to the Institute of Policy Reforms (IPR), the government’s claim that it achieved a growth rate of 4.1% – the highest in the last six years – during its first year in power is not true. Instead, the institute’s findings suggest the actual growth rate for 2013-14 stood at 3.5%, the lowest in the last four years.
“The claim that economic growth exceeded 4% after a gap of six years is factually incorrect,” IPR said in its report. According to it, 4.4% growth was achieved in 2011-12 but was revised downwards to 3.8% after a two-year gap. “Therefore, PBS manipulated data to show the highest GDP growth rate in the last six years, in 2013-14.”
IPR stated there were reasons to believe the growth rate for 2013-14 was significantly overstated, especially in the cases of large-scale manufacturing (LSM), construction, wholesale and retail trade, finance and insurance. The think tank worked out the growth rate for the outgoing fiscal year to be less than 3.5% on the basis of available official data; which PBS intentionally or unintentionally ignored while completing its growth figures.
While compiling the Economic Survey of Pakistan 2013-14, PBS included LSM growth during the first eight months of the fiscal even though it had figures for the first nine months.
According to IPR, LSM growth fell down to 2.7% in March. Consequently, the nine-month LSM growth rate for the outgoing year was 4.3%, as opposed to the eight-month growth rate of 5.3%. The institute also accused the government of overstating LSM growth by 1%.
“This has a consequential effect on the growth rate of the wholesale and retail trade sector. It reduces the GDP growth rate by 0.2 percentage points,” the IPR report said.
Similarly, the 11.3% growth rate for the construction sector appears too high, given the consequences of the key input, cement, which has increased by only 4.2%. IPR observed this will further shave off 0.2% off the growth rate.
Highlighting another flaw, IPR said 88% of the value-added banking and insurance sector is generated by commercial banks.
“Banks have shown a decline in profitability in real terms of over 15%. Therefore, the growth rate of this sector is unlikely to be 5.2%, as announced in the Economic Survey. It (banking and insurance growth) is negative,” the report stated. IPR estimated this will further reduce overall growth rate by at least 0.2%.
“Overall, we estimate that the growth rate of GDP in 2013-14 is close to 3.5% rather than 4.1% … the lowest in four years.”
IPR’s findings add to growing skepticism about the credibility of official statistics produced by PBS. Doubts regarding PBS were voiced in a recent meeting of the agency’s governing council, which is headed by Finance Minister Ishaq Dar. Dar questioned the educational qualification of PBS’s top management in the meeting, sources said.
However, IPR’s claim could once again pitch Dar against former finance minister Dr Hafiz Pasha – the managing director of IPR and the main brain behind its researches. Dr Pasha, widely acknowledged as an economist of international repute, recently faced a barrage of criticism from the incumbent finance minister after he criticised the latter’s economic policies.
Credibility in question: GDP growth for 2013-14 much lower than 4.1%, says IPR – The Express Tribune
