President rejects claims of ‘artificial’ growth

President Dr Irfaan Ali on Wednesday rejected claims that the country’s economic growth is artificially driven by government spending, saying strong productivity gains across the non-oil economy are the main drivers of expansion under Budget 2026.
Responding to public criticism of the structure of state expenditure, Ali said arguments that growth is fuelled solely by government spending reflect a “fundamental misunderstanding of basic macroeconomics.”
“GDP measures production, not payment,” the president said, stressing that rising non-oil GDP indicates increased output by businesses rather than higher government spending. “If non-oil GDP is growing, it is because productivity is increasing,” he added.
Ali said government spending does not itself constitute a production sector and only contributes to gross domestic product when it generates tangible economic activity, including infrastructure development, employment, service delivery, and private-sector output.
He pointed to official data showing that non-oil GDP growth accelerated from 4.6 percent in 2021 to 14.3 percent in 2025, averaging about 13 percent between 2022 and 2025. In 2025 alone, the non-oil sector accounted for nearly 20 percent of overall economic expansion, he said.
According to Ali, capital investments under Budget 2026 — particularly in infrastructure — are aimed at removing bottlenecks, boosting productivity, and enabling growth in sectors such as mining and forestry.
“These expenditures lead to increased production, more jobs, and expansion of the economy,” he said.
Ali emphasised that a clear understanding of the sources of economic growth is critical to sustaining investor confidence and ensuring long-term expansion.