GDP rebasing done with 2015-16 base. GDP growth rate for FY21 is 5.57%. GDP size: 55.5 tr or $346 bn. Per capita $1666. Debt to GDP 72%.

[Patriot forever]

Updating the economy​

Editorial
January 22, 2022

THE long-overdue rebasing of our GDP has boosted the economy’s size through improvements in the coverage area of economic activities. The calculation of national accounts to FY16 from FY06 has increased the economy’s size by almost 16.5pc to $347bn and jacked up the FY2021 growth rate from 3.9pc to a 14-year-high of 5.6pc. Even at the old base year, the GDP growth rate was revised up to 5.4pc owing to incorporation of the final data on industry, agriculture and services.

The updated accounts incorporate changes in prices, trade and industrial production indices over time. The economy’s revised value shows that its real size was underestimated by 11.3pc on prices of the previous base year of 2006. Gross national income has also increased to Rs59.3tr, with per capita income rising from $1,543 to $1,666. So what are the advantages and implications of this exercise for the government and public?

The rebasing of the GDP resulting in a higher growth rate and the economy’s expansion has spawned speculations that the government has fudged national accounts to paint a rosy picture and draw political capital. Such assumptions are uncalled for.

GDP rebasing is a process of replacing an old base year with a more recent one — usually every five years — to keep pace with price evolution and changes in the economy’s structure over time to capture current economic conditions.

Thus the new GDP series reflects a more accurate picture of the size and structure of the economy, and incorporates new activities and technologies that had previously not been captured by national accounts. It will allow policymakers to use a new set of economic information, which is more reflective of the current structure than those based on the 2006 base year, and help them make evidence-based decisions.

The impact of rebasing is felt primarily in changes in the major macroeconomic indicators. Indeed, the reduction in public debt from 84pc of GDP to 72pc and external debt from 29pc to 25pc after the economy’s expansion will enhance the government’s bargaining power and create space to borrow more at home and from abroad to meet fiscal and external account needs.

Likewise, the 1pc reduction in fiscal deficit as a ratio of GDP will provide greater room for fresh sovereign guarantees pegged on the economy’s size. At the same time, a higher GDP indicates a significant drop in the tax-to-GDP ratio from 11.1pc to 9.5pc and exports-to-GDP ratio from 8.6pc to 7.4pc, underscoring that most of our economic troubles are rooted in poor fiscal efforts and low productivity.

Meanwhile, if anyone thought they can use the improved numbers to show that fewer people slept on empty stomachs or the number of unemployed had decreased because of rebasing GDP, they are mistaken. Rebasing doesn’t make countries or people richer; it is just about updated data for policymakers to take informed public investment and taxation decisions.

Published in Dawn, January 22nd, 2022

I expected a better informed coverage especially on the LSM remodel at PBS.

BTW on the old base growth was 5.37% and on new base it is 5.57%. 3.94% figure is for the first 9 months of FY2021 not for the whole year.

 

[Patriot forever]

A nice article about LSM remodel ( Someone from outside had to cover the most important part).

Overall they did a fine job in textile value addition but there are areas which were left behind. They left out their most important accomplishments. Retards.

Impressions on LSM rebasing​

By
News Desk
-
January 23, 2022

January 23, 2022 (MLN): Finally, the Pakistan Bureau of Statistics (PBS) has rebased the Large-Scale Manufacturing Index (LSMI) after a gap of more than a decade. At first look, it seems that the PBS has done a great job at making the index more indicative of the current production trends in the country.
2015-16 rebasing now represents 22 categories – in-line with the International Standard Industrial Classification (ISIC) – compared to just 15 in the 2005-06 base. This had been a long-standing issue by various experts who argued that the 2005-06 base failed to present an accurate picture of the country’s industrial sector. The LSM numbers as per the 2015-16 base will likely be reported from January 2022 (no official announcement yet) onwards since Nov’ 21 data – reported after rebasing announcement – still used 2005-06 base.
Under the revision, the weight assigned to items reported through the Provincial Bureaus of Statistics (PBoS) has been doubled from 15.36% to 31.17% through the addition of new items: bakery products, chocolate & sugar confectionery; rice milling; mineral waters; preserved milk; towels; garments; corrugated paper/paperboard containers; pesticides; insulated wire and cable; parts and accessories for motor vehicles; and furniture. Overall, the number of items reported under the PBoS has been increased from 65 to 76. Some of these items i.e., garments, towels and furniture have been included as new categories whereas others have been added to existing ones.
Meanwhile, the weight for the Oil Companies’ Advisory Council (OCAC) has also been increased from 5.51% to 6.66% through an increase in weights assigned to different petroleum products. On the flipside, downward adjustments have been made to the weights for the Ministry of Industries and Predication (MoIP) from 49.55% to 40.54%. All in all, the LSMI now represents 123 items with a weight of 78.37% compared to 112 items with 70.33%.
After accounting for key changes, the LSMI still fails to deliver an accurate picture of the country’s industrial sector and the reporting methodology also warrants attention.

Take automobile production as an example, the PBS depends upon the Pakistan Automotive Manufacturers’ Association (PAMA) to submit monthly data. Although the majority of the automobile assemblers are a part of PAMA, production data from new firms such as Lucky Kia Motors, Al-Haj Proton, JW Forland and MG JW are still not part of the LSMI. Beyond the automobiles, the majority of motorcycle assemblers have also been ignored in the rebasing.

Another important sector missing from the LSMI is that of cell phone production which has been outright ignored from the index. Granted that the mobile production has picked up pace only after 2015-16 rebasing, but its contribution in the national accounts cannot be ignored. The PBS, with its large team, could have easily made additions of these two sectors to the 2015-16 base. Some experts estimate that by adding cell phone manufacturing to the LSMI, the overall GDP growth for FY21 could have clocked in at above 6%. During the calendar year 2020, an estimated 25m cell phone units were manufactured in the country but their contribution to the GDP is yet to be accounted.

Another issue with the LSMI is that of how the production data is collected and reported. Firstly, the PBS relies solely upon the corresponding industries to voluntarily submit production data. Experts fear that the production companies may be underreporting production data to avoid taxes. Meanwhile, apparently, the PBS also does not cross-check data through correlations with the usage of inputs such as electricity, gas consumption etc to verify their numbers. The PBS relies upon OCAC for data on refineries, oil marketing companies and pipeline companies, which are oftentimes different from primary sources.
Copyright Mettis Link News

Impressions on LSM rebasing

January 23, 2022 (MLN): Finally, the Pakistan Bureau of Statistics (PBS) has rebased the Large-Scale Manufacturing Index (LSMI) after a gap of more than a decade. At first look, it seems that the PBS has done a great job at making the index more indicative of the current production trends in the...

mettisglobal.news

@hydrabadi_arab @The Accountant @AZ1 @Norwegian @HRK @Sainthood 101 @N.Siddiqui @ghazi52 and everyone.

 

[The Accountant]

Points highlighted are correct but without any solution.

In reality our bureaucracy is outdated and corrupt and are not capable to deliver at all

 

[HRK]

these points are known but the issue is even the current rebasing is 6 years old which mean in next 2 or 3 years we would be require another rembasing which may reflect better ground realities of for economy and GDP but as of now fluctuation of +1-2% is understandable as sectors which are already highlighted in the article above and few more new sectors are also not part of this exercise.

For example like Startups and in services sector Call centers are not part of the current exercise same is the case with e-commerce as well these are all very new sectors which are creating positive impact to the economy but our current systems could not collect DATA due to many factors mainly due to the reason that these are beyond the current capacity of the system.

Experts fear that the production companies may be underreporting production data to avoid taxes.

insulated wire and cable

corrugated paper/paperboard containers

Now for quoted parts of your post during my days in banking I used to directly deals with these sectors with both Large and Medium level players and I can assure you in many cases the extent of underreporting goes way above 50% in these sectors.

 

[Abid123]

Alhamdulillah that Pakistan has a capable leader like Imran Khan. He is our last hope. Can you imagine if we only had PPP or PMLN?

 

[Norwegian]

Points highlighted are correct but without any solution.

In reality our bureaucracy is outdated and corrupt and are not capable to deliver at all

Shh don't let Bughaz Imranis know this. Let them blame incompetent PM Imran Khan

 

[muhammadhafeezmalik]

There is an indirect association
If u dont have any taxes your fiscal deficit balloons that leads to "note printing" or statebank lending
You also have lower investment and lower growth/exports as spending is lower


Everything is fair in loveView attachment 810552

We will not be able to print notes at will or SBP lending, we will have to borrow from commercial banks at commercial rates as per new finance bill. Will this not increase our cost of lending to plug fiscal deficit??

 

[ziaulislam]

We will not be able to print notes at will or SBP lending, we will have to borrow from commercial banks at commercial rates as per new finance bill. Will this not increase our cost of lending to plug fiscal deficit??

It will ..

But printing notes is what caused our economy to crash 20 times in last 40 yrs

Printing notes should be done by govt of afghanistan and zimbabawe not pakistan unless we want to be like them

 

[ghazi52]

 

[KaiserX]

A nice article about LSM remodel ( Someone from outside had to cover the most important part).

Overall they did a fine job in textile value addition but there are areas which were left behind. They left out their most important accomplishments. Retards.

Impressions on LSM rebasing​

By
News Desk
-
January 23, 2022

January 23, 2022 (MLN): Finally, the Pakistan Bureau of Statistics (PBS) has rebased the Large-Scale Manufacturing Index (LSMI) after a gap of more than a decade. At first look, it seems that the PBS has done a great job at making the index more indicative of the current production trends in the country.
2015-16 rebasing now represents 22 categories – in-line with the International Standard Industrial Classification (ISIC) – compared to just 15 in the 2005-06 base. This had been a long-standing issue by various experts who argued that the 2005-06 base failed to present an accurate picture of the country’s industrial sector. The LSM numbers as per the 2015-16 base will likely be reported from January 2022 (no official announcement yet) onwards since Nov’ 21 data – reported after rebasing announcement – still used 2005-06 base.
Under the revision, the weight assigned to items reported through the Provincial Bureaus of Statistics (PBoS) has been doubled from 15.36% to 31.17% through the addition of new items: bakery products, chocolate & sugar confectionery; rice milling; mineral waters; preserved milk; towels; garments; corrugated paper/paperboard containers; pesticides; insulated wire and cable; parts and accessories for motor vehicles; and furniture. Overall, the number of items reported under the PBoS has been increased from 65 to 76. Some of these items i.e., garments, towels and furniture have been included as new categories whereas others have been added to existing ones.
Meanwhile, the weight for the Oil Companies’ Advisory Council (OCAC) has also been increased from 5.51% to 6.66% through an increase in weights assigned to different petroleum products. On the flipside, downward adjustments have been made to the weights for the Ministry of Industries and Predication (MoIP) from 49.55% to 40.54%. All in all, the LSMI now represents 123 items with a weight of 78.37% compared to 112 items with 70.33%.
After accounting for key changes, the LSMI still fails to deliver an accurate picture of the country’s industrial sector and the reporting methodology also warrants attention.

Take automobile production as an example, the PBS depends upon the Pakistan Automotive Manufacturers’ Association (PAMA) to submit monthly data. Although the majority of the automobile assemblers are a part of PAMA, production data from new firms such as Lucky Kia Motors, Al-Haj Proton, JW Forland and MG JW are still not part of the LSMI. Beyond the automobiles, the majority of motorcycle assemblers have also been ignored in the rebasing.

Another important sector missing from the LSMI is that of cell phone production which has been outright ignored from the index. Granted that the mobile production has picked up pace only after 2015-16 rebasing, but its contribution in the national accounts cannot be ignored. The PBS, with its large team, could have easily made additions of these two sectors to the 2015-16 base. Some experts estimate that by adding cell phone manufacturing to the LSMI, the overall GDP growth for FY21 could have clocked in at above 6%. During the calendar year 2020, an estimated 25m cell phone units were manufactured in the country but their contribution to the GDP is yet to be accounted.

Another issue with the LSMI is that of how the production data is collected and reported. Firstly, the PBS relies solely upon the corresponding industries to voluntarily submit production data. Experts fear that the production companies may be underreporting production data to avoid taxes. Meanwhile, apparently, the PBS also does not cross-check data through correlations with the usage of inputs such as electricity, gas consumption etc to verify their numbers. The PBS relies upon OCAC for data on refineries, oil marketing companies and pipeline companies, which are oftentimes different from primary sources.
Copyright Mettis Link News

Impressions on LSM rebasing

January 23, 2022 (MLN): Finally, the Pakistan Bureau of Statistics (PBS) has rebased the Large-Scale Manufacturing Index (LSMI) after a gap of more than a decade. At first look, it seems that the PBS has done a great job at making the index more indicative of the current production trends in the...

mettisglobal.news

@hydrabadi_arab @The Accountant @AZ1 @Norwegian @HRK @Sainthood 101 @N.Siddiqui @ghazi52 and everyone.

Interesting stuff I never knew pakistan manufactered 25 million cell phone yearly. I am sure 99% did not even know that.

If we increase production to say 50 million, we could not only meet local demand but export to middle east, central asia, and China as well. We should learn from Vietnam and use their model of high end value added export development.

Exporting textiles and rice will only get us so far. We will max out around the 40bn textile export range before growth in that fields slow significantly. We should focus on high end electronic product such as cell phones, computers, laptops, EV's, etc... we have a FTA in place with China where we can import most of the components, assemble the components in factories in pakistan, and export using Karachi/Gwadar.

We are more blessed than Bangladesh or Vietnam in the sense our middle class is twice as large and more wealthy as well. We will easily be able to meet domestic demand for any factory set up in Pakistan. Think of the demand from Karachi, Lahore, Islamabad alone would easily dwarf that of most countries.

If more funds are invested into Karachi, we can easily make it into a major electronic re-export hub. Think of how many other accessories come along with these electronic products.

IT services/ High end electronics should be the MAJOR export focus of the govt.

 

[hydrabadi_arab]

A nice article about LSM remodel ( Someone from outside had to cover the most important part).

Overall they did a fine job in textile value addition but there are areas which were left behind. They left out their most important accomplishments. Retards.

Impressions on LSM rebasing​

By
News Desk
-
January 23, 2022

January 23, 2022 (MLN): Finally, the Pakistan Bureau of Statistics (PBS) has rebased the Large-Scale Manufacturing Index (LSMI) after a gap of more than a decade. At first look, it seems that the PBS has done a great job at making the index more indicative of the current production trends in the country.
2015-16 rebasing now represents 22 categories – in-line with the International Standard Industrial Classification (ISIC) – compared to just 15 in the 2005-06 base. This had been a long-standing issue by various experts who argued that the 2005-06 base failed to present an accurate picture of the country’s industrial sector. The LSM numbers as per the 2015-16 base will likely be reported from January 2022 (no official announcement yet) onwards since Nov’ 21 data – reported after rebasing announcement – still used 2005-06 base.
Under the revision, the weight assigned to items reported through the Provincial Bureaus of Statistics (PBoS) has been doubled from 15.36% to 31.17% through the addition of new items: bakery products, chocolate & sugar confectionery; rice milling; mineral waters; preserved milk; towels; garments; corrugated paper/paperboard containers; pesticides; insulated wire and cable; parts and accessories for motor vehicles; and furniture. Overall, the number of items reported under the PBoS has been increased from 65 to 76. Some of these items i.e., garments, towels and furniture have been included as new categories whereas others have been added to existing ones.
Meanwhile, the weight for the Oil Companies’ Advisory Council (OCAC) has also been increased from 5.51% to 6.66% through an increase in weights assigned to different petroleum products. On the flipside, downward adjustments have been made to the weights for the Ministry of Industries and Predication (MoIP) from 49.55% to 40.54%. All in all, the LSMI now represents 123 items with a weight of 78.37% compared to 112 items with 70.33%.
After accounting for key changes, the LSMI still fails to deliver an accurate picture of the country’s industrial sector and the reporting methodology also warrants attention.

Take automobile production as an example, the PBS depends upon the Pakistan Automotive Manufacturers’ Association (PAMA) to submit monthly data. Although the majority of the automobile assemblers are a part of PAMA, production data from new firms such as Lucky Kia Motors, Al-Haj Proton, JW Forland and MG JW are still not part of the LSMI. Beyond the automobiles, the majority of motorcycle assemblers have also been ignored in the rebasing.

Another important sector missing from the LSMI is that of cell phone production which has been outright ignored from the index. Granted that the mobile production has picked up pace only after 2015-16 rebasing, but its contribution in the national accounts cannot be ignored. The PBS, with its large team, could have easily made additions of these two sectors to the 2015-16 base. Some experts estimate that by adding cell phone manufacturing to the LSMI, the overall GDP growth for FY21 could have clocked in at above 6%. During the calendar year 2020, an estimated 25m cell phone units were manufactured in the country but their contribution to the GDP is yet to be accounted.

Another issue with the LSMI is that of how the production data is collected and reported. Firstly, the PBS relies solely upon the corresponding industries to voluntarily submit production data. Experts fear that the production companies may be underreporting production data to avoid taxes. Meanwhile, apparently, the PBS also does not cross-check data through correlations with the usage of inputs such as electricity, gas consumption etc to verify their numbers. The PBS relies upon OCAC for data on refineries, oil marketing companies and pipeline companies, which are oftentimes different from primary sources.
Copyright Mettis Link News

Impressions on LSM rebasing

January 23, 2022 (MLN): Finally, the Pakistan Bureau of Statistics (PBS) has rebased the Large-Scale Manufacturing Index (LSMI) after a gap of more than a decade. At first look, it seems that the PBS has done a great job at making the index more indicative of the current production trends in the...

mettisglobal.news

@hydrabadi_arab @The Accountant @AZ1 @Norwegian @HRK @Sainthood 101 @N.Siddiqui @ghazi52 and everyone.

So mobile manufacturing will not be included till next rebase. Thats 10 years away. Maybe they should do one after 5 years.

 

[RangeMaster]

Honestly non of that will matter. Pakistan received $45b in 2018 and CAD was $18b. Now Pakistan will get $70b and CAD again will be $18b despite devaluation. Unless we increase direct tax and take money out of hands from well of people.

What....??? $45 billion? From where? And again $70 billion. From Elon Musk?
Or
You are talking about revenue collection. That's in "Pkr" i.e "Pakistani Rupee". Debt repayments are in "US Dollars" America/WB/IMF don't accept Pakistani rupee.

 

[hydrabadi_arab]

What....??? $45 billion? From where? And again $70 billion. From Elon Musk?
Or
You are talking about revenue collection. That's in "Pkr" i.e "Pakistani Rupee". Debt repayments are in "US Dollars" America/WB/IMF don't accept Pakistani rupee.

You didn't understand. To get out of IMF cycles we need to increase direct taxation along with reducing fiscal deficit. That will reduce CAD and we will have spare $$ to pay back debt in $$.