Q3: 2.4pc growth
The credibility of this metric is suspect, given that the projection for the previous two quarters have been revised by the PBS (Pakistan Bureau of Statistics): upgraded to 1.37 percent July-September 2024 against the earlier calculation of 1.34 percent and downgraded to 1.53 percent October-December 2024 against the earlier calculation of 1.73 percent.
The in-house capacity to address important gaps in the statistics as per the first review documents uploaded by the International Monetary Fund on its website this Saturday past is being strengthened and 'efforts to enhance the national accounts continue with the PBS publishing quarter estimates of expenditure side for the first time in December.'
The Fund further referred to a Memorandum of Economic and Financial Policy (read time bound condition) item that stipulates that 'Data collection for three major surveys (Agriculture Census, Labour Force Survey and Household Integrated Economic Survey) is well underway and the Pakistan Bureau of Statistics will publish the final reports (and post the results to the National Summary Data Page portal) by end December 2025, which will provide a better basis to assess recent developments in key areas of the macroeconomic statistics, and for assessing the adequacy of social spending.
Work on a new PPI index has also progressed, including on agreeing modalities with provincial statistics agencies for monthly data collection starting in July 2025. Preparations are also underway to conduct three major surveys in FY26: the Census of Manufacturing Industries, the survey of Small and Household Manufacturing Industries, and the Family Budget Survey, which will incorporate spending on online platforms for the first time.'
Calculation of these statistics and the gradual improvement of the capacity to be more accurate and credible than has been the case so far would, one hopes, be used by the Ministry of Finance to take timely decisions rather than allowing an impending financial crisis to compel the administration to seek IMF support.
Given the fact that we are currently on the twenty-fourth Fund bailout package disturbingly indicates lack of credible data to take timely decisions, a drawback, that many independent economists accuse successive administrations of purposely manipulating, but also the root cause of Pakistan's current indebtedness.
The Fund in its report maintained that 'work on strengthening the Government Financial Statistics is continuing, with the establishment of a GFS team and agreement of a multi-year roadmap for GFS expansion and improvements, including transitioning to GFSM 2014 and incorporating state-owned entities' data.' Or, in other words, there is substantial work involved to strengthen the PBS but more importantly one would hope that the practice of exerting political pressure to manipulate data is abandoned.
It is important to note that the growth of 2.4 percent for the third quarter remains suspect for two reasons. First, the administrative measures to meet the IMF condition of ensuring full-cost recovery of poorly performing utilities has raised input costs across the board, which together with tight monetary policy (11 percent discount rate remains higher than the regional average) accounts for negative large scale manufacturing sector growth.
And the IMF condition to withdraw industrial incentives (export specific or more general) as well as federal and provincial governments no longer engaging in announcing a support price for some major crops is likely to reduce output next fiscal year. The major growth prospect remains the Public Sector Development Programme, which, historically, is mercilessly slashed as and when the authorities fail to meet the budget deficit target.
The growth projection for the current year of 2.6 percent, revised from the earlier estimate of 3.2 percent, by the Fund requires an overambitious growth target in the last quarter, given that the first quarter target is estimated at 1.37 percent, second at 1.53 percent and in the third quarter 2.4 percent.
Copyright Business Recorder, 2025
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