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Pakistan's 3.7% Growth an "Accounting Illusion," Says Think Tank Report

A report from Pakistan's Express Tribune, citing the think tank EPBD, argues the country's official 3.7% economic growth figure for Q1 FY26 is an "accounting illusion." The analysis claims the reported 9.4% industrial growth stemmed from methodological adjustments and subsidies, not real production increases. It highlights contradictions, such as a reported construction boom despite modest cement production growth and a sharp fall in food exports alongside rising imports. The report concludes the data masks an economy under pressure, with declining exports and a lack of sustainable private-sector-led growth.

Key Points: Pakistan's Economic Growth Figure Called an "Accounting Illusion"

  • Growth figure driven by accounting adjustments
  • Industrial growth fueled by subsidies, not output
  • Contradiction between rising imports and falling exports
  • Reported construction boom mismatches cement data
2 min read

Pakistan's '3.7 pc growth' figure likely an accounting illusion: Report

A think tank report claims Pakistan's 3.7% Q1 growth is a statistical illusion, not real gains in production, exports, or manufacturing capacity.

"methodological artefacts, deflator manipulation and import-led assembly activity - Economic Policy and Business Development (EPBD)"

New Delhi, Jan 5

Pakistan's official figures citing 3.7 per cent economic growth in Q1 FY26 is likely an accounting illusion on paper rather than real increases in production or exports, a report has said.

A report from Express Tribune cited the think tank Economic Policy and Business Development's (EPBD) view that the growth approved by the National Accounts Committee (NAC) reflects "methodological artefacts, deflator manipulation and import-led assembly activity," instead of real gains in productive capacity.

The forum called the data an attempt at an illusion of recovery while business activity, manufacturing output and exports remain under pressure.

Primarily, the official headline figure of 9.4 per cent industrial growth, largely stemmed from accounting adjustments, the think tank said. Electricity, gas and water supply was recorded as having grown 25 per cent growth, but it was fuelled by subsidies jumping from Pakistani Rupees (PKR) 20 billion to PKR 118 billion, rather than higher output, it said.

Construction mentioned to have grown 21 per cent is unlikely as cement production rose by only 15 per cent, while transport-related imports more than doubled, including an extraordinary spike in bus and truck imports, it added.

Food exports fell sharply by 25.8 per cent during Q1FY26, while food imports surged by 18.8 per cent, yet agriculture and food manufacturing were reported to have expanded. Agriculture, it said, grew 2.9 per cent despite flood impacts, stagnant crop output and the absence of a wheat harvest during the quarter.

EPBD pointed to big gaps between domestic growth claims and trade indicators. The report said that imports rose 11 per cent in the first half of the year, while exports declined around 9 per cent, reinforcing concerns that the economy lacks sustainable, private-sector-led growth.

Cotton production declined, ginning dropped by over 12 per cent, and cotton-based exports fell around 10 per cent, it noted.

- IANS

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Reader Comments

P
Priya S
The data speaks for itself. Food exports down 25% but agriculture reported as growing? How does that math work? Seems like a classic case of "jumla" statistics to create a positive narrative for international lenders. Hope the global community sees through this.
R
Rohit P
As an Indian, I hope our neighbor finds stability, but fake growth numbers help no one. Their people suffer the most. Real development is needed, not accounting tricks. The spike in truck imports while production is down is a huge red flag 🚩.
S
Sarah B
Living in Delhi, I follow regional economics. This "import-led assembly" they mention is a big problem. It drains forex reserves without building long-term capacity. India faced similar issues decades ago. Sustainable growth is export-led and investment-driven.
V
Vikram M
Respectfully, we should focus on our own economic challenges rather than dissecting theirs. That said, the report is a good reminder of the importance of transparent data. Our statistical systems have also faced criticism in the past. We must ensure our growth is real and inclusive.
K
Kavya N
Construction growing 21% but cement only 15%? Basic logic fails. This kind of manipulation ultimately hurts the common citizen the most. When the bubble bursts, it's the poor who pay the price. Very sad for the people across the border.

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