ISLAMABAD: Pakistan’s reported 3.7 percent economic growth in the first quarter of the current fiscal year exists largely on paper and does not reflect real improvement in productive output, according to the Economic Policy and Business Development (EPBD), a think-tank.
In a critical assessment, EPBD stated that the growth figure is the result of statistical adjustments and import-based assembly operations, rather than genuine expansion in domestic production capacity. The think-tank said multiple indicators suggest that economic performance has been overstated through accounting methods rather than real sectoral strength.
EPBD was of the view that sustainable economic growth is not possible without business-friendly policies and private-sector-led investment. The report highlighted serious inconsistencies between official data and ground realities.
According to the analysis, food exports declined by 25.8 percent, while food imports rose by 18.8 percent, yet agriculture and food manufacturing were shown as growing sectors, an apparent contradiction. Similarly, the reported 9.4 percent growth in the industrial sector was attributed to manipulation of price deflators rather than increased production.
The think-tank also questioned the 25.46 percent growth shown in the power sector, stating that it was driven by increased subsidies rather than higher electricity generation. In the construction sector, a 21 percent growth rate was reported, but EPBD noted that this was largely due to heavy reliance on imported machinery and vehicles, with imports of buses and trucks rising by 1,180 percent.
Despite a 1.2 percent decline in cotton production, a 12.1 percent drop in cotton ginning, and nearly 10 percent fall in cotton-based exports, textile exports were shown to have increased by 7.3 percent, a trend EPBD linked to the use of imported synthetic fibers instead of local raw materials.
The report further pointed out flaws in the calculation of Gross Value Added (GVA), stating that reductions in intermediate costs, without productivity gains, automatically inflate GVA figures.
While Prime Minister Shehbaz Sharif and Finance Minister Muhammad Aurangzeb have described the 3.7 percent growth rate as a sign of economic stabilization and progress, EPBD warned that high interest rates, heavy taxation, expensive energy, and inconsistent policies continue to place immense pressure on Pakistan’s industrial and export sectors.
EPBD also noted that during the first half of the fiscal year, imports increased by 11 percent, whereas exports fell by nearly 9 percent, further underscoring structural weaknesses in the economy.
