Economic Survey: an objective survey?
EDITORIAL: Federal Finance Minister Muhammad Aurangzeb began traditional press conference on the Economic Survey 2024-25 claiming that that the Pakistan economy must be viewed in the context of the global economy.
It would, however, been more appropriate to compare Pakistan's growth rate with regional countries — China's growth rate for 2024 was 5 percent, India's 6.5 percent for 2025, Bangladesh's 4.2 percent, and Sri Lanka's 5 percent against Pakistan's projected 2024-25 growth of 2.68 percent.
This rate even though downgraded from the budgeted 3.5 percent will be a challenge, given that the first quarter GDP rate was revised by the Pakistan Bureau of Statistics (PBS) to 1.34, the second quarter revised to 1.53 percent and third quarter (not yet revised) to 2.4 percent.
The Survey notes manufacturing growth at 4.77 percent in spite of slow recovery of the large-scale manufacturing (LSM) sector; however, this rate is not in synch with the LSM negative growth of 1.47 percent July-March 2025 against negative 0.22 percent in the comparable period last year.
The Survey determined to give this a positive spin noted that 'despite the overall lacklustre performance it is noteworthy that nearly half of the LSM sectors demonstrated positive growth, including industries such as wearing apparel, textiles, coke and petroleum products, pharmaceutical and automobiles.'
One can only hope that this is not a prelude to changing the weightage of the industrial subsectors to show improved performance as was witnessed when Dr Hafeez Sheikh as the Finance Minister reduced the weightage of food in inflation calculation thereby, halving the rate of inflation overnight.
Inflation, Aurangzeb contended rightly, has come down dramatically. We are sure that he is aware that basic economic theory dictates a 2 percent inflation is necessary to oil the wheels of industry (supported by the US Federal Reserve).
A major contributing factor to the drop in food inflation was the decline in the prices of the staple wheat due to the International Monetary Fund (IMF) barring provincial/federal governments from procuring or setting a support price for wheat, which is likely to lead farmers to switch to a more lucrative crop next year, necessitating imports.
The Survey inexplicably does not cite employment/unemployment rates and those that it cites are dated to 2020-21 while the section on Population, Labour Force and Employment details policy priorities including Gender Path and Sustainability, Prime Minister's Women Empowerment package 2024, Initiatives for skill development and employment generation, new initiatives sourced to the Prime Minister, Prime Minister's Youth programme as well as future of employment in green and digital transitions. There is, however, a section on overseas employment but here too the total number is calculated from 1972 onwards, thereby data of overseas employees in 2024-25 is not quantified.
The Survey disturbingly notes a net outflow of 1.6 billion dollars on the financial front as government debt repayments escalated and net (as opposed to gross) liabilities decreased. In other words, the financial account remains a source of serious concern, necessitating higher loans and rollovers in the next fiscal year.
Total expenditure rose to 16.337 trillion rupees July-March 2025 compared to 13.682 trillion rupees in the comparable period of last year – a rise of 19.4 percent with current expenditure rising by 18.3 percent as per the Survey and this in spite of the massive decline in debt service payments, which rose by 16.7 percent this year compared to a rise of 54 percent recorded last year due to a decline in the discount rate — from 22 percent last year to 11 percent last month.
The government had budgeted a 21 percent rise in current expenditure in 2025 and after the recent Indian adventurism effectively repelled by Pakistan it is likely that the rise maybe higher than the budgeted 21 percent.
The Survey's claim that the rise in expenditure is attributable to a 'notable rise' in development expenditure is not borne out by data uploaded on the Ministry of Planning, Development and Special Initiatives website which distinguishes authorisations (894 billion rupees July-April 2025) from actual disbursements (expenditure as per SAP), which is less than half at 449 billion rupees.
It is important to note that the focus remained on physical infrastructure development rather than on social development particularly education, which was one of the main contributors to China's meteoric rise as an economic power that has enabled the country not to succumb to US tariff threats.
Pakistan faces many challenges associated with climate change; however, Shehbaz Sharif-led government has shown a key commitment to overcoming these challenges, reflected by IMF's approval of the 1.4 billion-dollar Resilience and Sustainable Facility.
The voluminous Economic Survey publication prepared by the Economic Adviser's Wing under the administrative control of the Finance Ministry released to the general public on a national holiday and as usual a mere one day prior to the Budget presages few, if any, indications of what the Budget would contain the following day.
While the statistics it contains are not up to date (with few exceptions including trade figures updated till April and foreign exchange reserves till 27 May) the analysis as always mirrors the government's claims of success in raising the tax-to-GDP ratio (though the budgeted shortfall till end May was cited at one trillion rupees) and the continuation of reliance on indirect taxes whose incidence on the poor is greater than on the rich.
Copyright Business Recorder, 2025
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