ISLAMABAD: Minister for Planning and Development Asad Umar on Tuesday said the fact that the direction of economic growth had been corrected amid the challenging circumstances was more important than the growth rate itself that would get even stronger in the last quarter of the current fiscal year.
Speaking at a news conference after a meeting of the federal cabinet, the minister said the cabinet also reviewed the situation and expressed satisfaction over the development. He lashed out at the critics for questioning the 3.94 per cent GDP growth rate approved by the National Accounts Committee, saying all high frequency data was available on a monthly basis and nobody ever raised any suspicion.
The minister said there was a reasonable ground to expect the growth rate to go up further as almost everything, including businesses, had been closed last year in these months, while large scale manufacturing (LSM) alone jumped by 20pc in April this year.
Says economic growth in right direction more important than growth rate itself
He said the foundation for better economic performance that led to the 3.94pc growth rate this year was laid by Prime Minister Imran Khan himself at the outset of Covid-19 when he decided to protect the weak segments of society and daily-wage workers in a better way than the rest of the world by not completely closing down businesses.
He said the government had launched Ehsaas Programme to protect poor people and extended over Rs200 billion to them who reinvested in the economy. The Ministry of Finance and State Bank of Pakistan moved quickly in extending a stimulus package which gave confidence to the market and protected people from massive job losses, he said, adding that the prime minister had personally led the construction sector initiative and convinced the managing director of the International Monetary Fund that unlike rich countries Pakistan could generate a lot of economic activities.
Mr Umar said the construction sector-related data had been coming up on a monthly basis and nobody ever challenged it was wrong. He said overseas Pakistanis remitted $5.4bn higher in 10 months this year than the same period last year. The remittance at the end of the year is expected to be $6.5bn higher than last year’s, meaning the economy would receive over Rs1 trillion additional funds this year.
The minister said nobody ever questioned this 29pc growth in remittances. Exports were also higher by 10pc.
In agriculture, to which was associated 50pc of the population, output of four out of five major crops was higher than last year, while three of them — wheat, rice and maize — achieved the highest-ever and sugarcane second-highest production this year.
Mr Umar said cotton crop did not perform well and all agriculture-related data, except wheat, had been available to all for quite sometime and was also acceptable to all. He said LSM showed 10pc growth during the first nine months of the current fiscal year and would go up by 20pc in the remaining three months because of low base effect of last year when factories were closed but they are now operational.
The minister said 40pc of agriculture and industry had a direct impact on wholesale trade and transport sector and it was very logical that byproduct of a key sector would also have positive contribution. The services sector had been boosted by the construction sector, he said, adding that the cement sector had been showing a record growth since the start of the year. Likewise, he said, the private sector credit had also shown a 60pc growth during the first nine months of the current fiscal year which meant that investments were going into factories with Rs126bn net increase in credit.
All these factors, the minister said, were drivers of consumption as farmers and families of overseas Pakistanis spent additional money they received this year, while others were supported with additional Rs200bn under the Ehsaas Programme.
He said there was no direct connection between investment and economy in this case for the fact that Pakistan had passed through a stabilisation programme after the previous government’s policies had overheated the economy and everything had come crashing and led to surplus capacity. This unutilised capacity had now been fully operationalised and showing impressive results, while maximum utilisation of funds under the Public Sector Development Programme in the last quarter would also jack up final numbers.
Asked why former finance minister Dr Abdul Hafeez Shaikh had been removed when the economic conditions were so robust, Asad Umar said it was more because of the governance style of Prime Minister Khan who wanted best out of everything than the performance. He said Dr Shaikh had done a lot of hard work and his prudent policies had turned around the economy to a stage it stood today. “This is style of governance of the prime minister, and not an indictment,” he said.
Published in Dawn, May 26th, 2021