The losses due to recent hartals and blockades in four sectors would be Tk49,018 crore, which is 4.7% of the GDP of the last fiscal, says an independent estimate released in Dhaka yesterday.
Considering the losses, the Gross Domestic Product is apprehended to moderate at a range between 5.6% and 5.8% this fiscal year.
The damages in terms of money were calculated taking into consideration 55 hartals and blockades enforced between July 2013 and January 2014 – before and after the general election held on January 5.
The land transport (rail and road) sector incurred losses of Tk16,689 crore, highest among the four sectors as estimated by Center for Policy Dialogue (CPD).
It was followed by agriculture and agro-based industries that faced losses of Tk15,829 crore, clothing and textiles Tk13,750 crore and tourism Tk2,750 crore.
The civil society think tank released the report based on partial and uncorroborated estimates at a press briefing on Analytical Review of Bangladesh’s Macroeconomic Performance in Fiscal Year 2014 at its office.
“We need to be mindful that the estimated loss does not indicate net loss as some of the losses are recouped through various adjustment measures overtime,” stated the report. “However, they do provide some insights about the magnitude of the incurred losses during the recent spate of political violence.”
The research organisation scanned print media to generate an assessment about the magnitude of the political violence related to economic losses.
“There will be no major supply side disruption and uncertainty arising out of political turmoil over the rest of fiscal year,” said the report, defending CPD’s economic growth projection.
In a sharp contrast, Finance Minister AMA Muhith projected this fiscal’s GDP to be not less than 6.3%, much lower than the target of 7.2% while Bangladesh Bank estimated it to be between 5.7% and 6%, International Monetary Fund 5.5%, the World Bank 5.7% and Asian Development Bank 5.8%.
“The possible slowdown would be due to rising concerns in terms of macroeconomic stability,” said Mustafizur Rahman, CPD executive director.
He said a number of indicators like inflation, ADP implementation, remittance inflow, investment and foreign aid utilisation continued to deteriorate in the first half of FY14. “Most of the macroeconomic correlates showed either disquieting or stagnating trends as the economy suffered from political volatility.”
To stimulate the growth, he recommended a package of policy measures – restructuring the fiscal framework, support to Boro harvest and rural economy, compensatory measures for the affected sectors and ensuring policy predictability.
The government has so far taken initiatives like cash subsidy, loan rescheduling and reduction of tax at source to offset the losses suffered by the export-oriented sectors.
“But the most important agro sector and small and medium businesses that were equally affected due to the political violence is yet to receive any package,” said CPD Distinguished Fellow Debapriya Bhattacharya.
The currently plasticised “seize fire” or “peace clause” approach by the contending political camps is useful and might restore the operational efficiency of the economic capacities, but will not be enough to induce expansion of capacities to attain a higher economic growth and more gainful employment, he said.
“The long-term investment prospect will remain uncertain as long as credible, fair and participatory election is not held.”
Without greater predictability in the political front, he said one may not expect any significant upturn of private investment both local and foreign in the country. “Creation of more democratic space for the non-state actors may have positive influence on energising the economic activities.”