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GDP growth 5.2pc in FY20: BBS

Economists say coronavirus fallout not taken into consideration

Staff Correspondent | Published: 22:59, Aug 11,2020

 
 

A file photo shows workers making personal protective equipment at a readymade garment factory on the outskirts of Dhaka. The country’s economy grew by 5.24 per cent in the last fiscal year 2019-2020 despite an unprecedented blow to economy in the last quarter of the year by the COVID-19 outbreak, according to the Bangladesh Bureau of Statistics provisional estimates. — New Age photo

The country’s economy grew by 5.24 per cent in the last fiscal year 2019-2020 despite an unprecedented blow to economy in the last quarter of the year by the COVID-19 outbreak, according to the Bangladesh Bureau of Statistics provisional estimates.

BBS, the statistical arm of the government under the planning ministry, on Monday released the data estimating the gross domestic product (GDP) growth for FY20 at much lower than the GDP growth rate at 8.15 per cent of previous FY19.

Earlier the government revised down the GDP growth target to 5.2 per cent for FY20 from original 8.2 per cent due to impact of the coronavirus outbreak.

Experts and economists, however, remained sceptical and raised eyebrows to the estimates saying that the higher economic growth was not matched with the actual economic situation and performance of economic indicators.

The growth figure is also inconsistent with the other indicators calculated by the BBS, they said.

International and local research organisations predicted that Bangladesh’s GDP growth would range between 1.6 per cent and 3.5 per cent in FY20 due to fallout of the coronavirus outbreak.

The World Bank projected GDP growth at 1.6 per cent, the International Monetary Fund at 2 per cent, UK-based Economist Intelligence Unit 3.5 per cent and local think-tank Centre for Policy Dialogue at 2.5 per cent for FY20.

CPD distinguished fellow Mustafizur Rahman said that the estimated growth rate was not consistent with the performance of economic indicators, including private investment, export and import, and the economic situation during the last quarter (April-June) of the fiscal year when economic activities remained almost halted.

‘Economy does not grow without investment,’ he said.

Pointing out the inconsistencies in the estimation, he said that as per the BBS, the share of investment to GDP increased to 31.75 per cent, including 23.63 per cent private investment and 8.12 per cent public investment, though finance minister AHM Mustafa Kamal set the ratio at 20.80 per cent with 12.72 per cent private investment.

‘The BBS will have to revisit the growth figure while it will finalise the calculation removing the inconsistencies,’ Mustafizur told New Age on Tuesday.

The BBS estimated the GDP growth rate at 6.48 per cent for industry sector followed by 5.32 per cent for service sector and 3.11 per cent for agriculture sector in FY20 against 12.67 per cent, 6.78 per cent and 3.92 per cent respectively for industry, services and agriculture sectors in FY19.

Of which, manufacturing sub-sector under the industry grew by 5.84 per cent in FY20 against 14.20 per cent in FY19.

Former World Bank lead economist Zahid Hussain raised question about the overall GDP growth rate and other estimations.

The government revised down the growth target to 5.2 per cent before the budget when the full-year data for sectors was not available and surprisingly, there is no change in estimation even after three months when full-year data for the sectors is available, he said.

‘It seems that the BBS made the calculation based on data available in March and April,’ he said.

The estimation does not have reflection of the real situation of the COVID outbreak when the manufacturing sector did not have production and sales, export and input import declined but the BBS estimated growth for the manufacturing sector, he observed.

Both export and local market-based industries experienced a slump in production and sales in the period.

South Asian Network on Economic Modeling executive director Selim Raihan doubted whether the BBS took the impact of the coronavirus outbreak into account while making the estimates.

All indicators, except remittance, were in a downward trend in the year, which was not reflected in the GDP growth rate, he said.

He said that there were many inconsistencies, including calculation of investment and national savings, as entrepreneurs did not make new investment and people survived the pandemic on savings.

The BBS data showed that the rate of investment to GDP and gross national savings increased to 31.75 per cent and 30.11 per cent respectively in FY20 from 31.57 per cent and 29.50 per cent respectively.

Most of the countries predicted either negative or very low growth rate for the year, but the BBS estimated the growth rate based on pre-determined framework without considering the impact on economy of the outbreak, he observed.

According to the BBS, the total GDP size of Bangladesh stood at Tk 27,963,782 million in FY20 from Tk 25,424,826 million in FY19.

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