In Pakistan good news on economic front isn’t about numbers alone

In a country that devours mostly depressing news, good tiding should be warmly welcomed. It is a riddle, wrapped in a mystery inside an enigma to understand why this is generally not the case in Pakistan.

The government’s recent claim that it is likely to notch up an impressive 3.94% GDP growth for the current financial year and that the national per capital income has also registered improvement has not fallen on receptive ears.

GDP growth stats sent out by the National Accounts Committee has the government’s own ministers in a state of ecstasy that they want to see resonate across the nation, a desire that remains unfulfilled.

Similarly per capita income increase too is something to write home about considering the widespread economic depression caused by structural problems but aggravated by Covid19 ravages. The government believes it has a good case to plead on both these counts.

The State Bank of Pakistan has joined in the chorus of praise in its assessment. In its tweet that followed days of debate about whether or not growth figures need to be taken seriously, the Central Bank has endorsed them resoundingly.

It has said that “post-Covid recovery underway since last summer has strengthened.” It has quoted the 9-month current account to be in surplus for the first time in 17 years and has underlined that foreign exchange reserves are at a four year high.”

In the Bank’s assessment this rebound is “fuelled by a well-calibrated policy response”.

It explains the dynamics in the following words: “Given high public debt, fiscal support was targeted to the most vulnerable. The underprivileged have benefited through the globally-acclaimed Ehsaas Programme. At the same time public debt and deficit have been kept under check which has supported market sentiment, investment outlook, and economic recovery.”

Everyone in the government excited

The Bank mentions the fact that it has provided a targeted economic stimulus of Rs2 trillion that has significantly contributed to the uptick that has got everyone in the government excited. Not so, says the Opposition.

It has questioned these claims and has accused the government of inflating the numbers to create a feel-good environment for itself. This would not be an issue because, in the binary of national politics, the opposition is bound to react along predictable lines and generally such views can be shrugged off through rhetorical rebuttals. But experts too have jumped into the debate to create further complexities.

One has pointed out that official data released by the Ministry of Planning and Development that finalised the national accounts confirms the fact that “per capita income estimated at $1,543 was just above $1,529 in 2015-16 and well below $1,630 in 2017-18, just before the downhill journey started.

The per capita income had dropped to $1,459 in 2018-19 and further down to $1,361 in 2019-20. The size of that stood at $315 billion in 2018 and is now reported to have recovered to about $295bn this year from $264bn last year.”

More to the point, there is no consensus on the national headcount used by government officials to work out improvement in the per capita income.

Some critics have pointed out that baseline population figure is misleading in that it excludes nearly 10 million people from the equation and thus spreads the per capita income across fewer than actual figures to document the improvement.

GDP growth is better documented and actually mentions the sectors such as large scale manufacturing and the services sectors that have pushed up the numbers beyond expectations.

Core stake holders in economy

It would be interesting to see how the international lenders would absorb these important claims. They are core stake holders in Pakistan’s economy through lending, loaning and development programmes worth billions of dollars.

Before government figures came out most of them were reporting a rather lacklustre picture of the months ahead. The Asian Development Bank was forecasting a 2% GDP growth. The International Money Fund had it set at 1.5% and the World Bank prognosis was 1.3%. Even the State Bank’s own assessment did not see the GDP growth to go beyond 3%.

It is fairly awkward for the world’s best economic wizards to have gone so wrong with the numbers that they should be able to work out with considerable precision given the fact that Pakistan’s real time economic data is shared with them as part of their financial arrangements here.

However, the ultimate clincher for the government would be neither lenders’ assessments nor its own figures. This will be restoration of public faith in the change of the national economic direction which for years has not been far below the country’s real potential.

More jobs, more business and commercial activity, more exports, more improvement in human development indexes is what will close this debate in the government’s favour.

Numbers and their authenticity matters, but what matters more is the buzz in the market of public’s life that shapes their opinions and forms their views. Growth has to be seen and felt to be believed.

Syed Talat Hussain is a prominent Pakistani journalist and writer. Twitter: @TalatHussain12