• Wednesday, Jul 15, 2020
  • Last Update : 06:23 pm

Lowest projected GDP growth in 25 years

  • Published at 11:48 am June 7th, 2020
RMG
FIle photo: Readymade Garment Workers seen working in a factory Rajib Dhar/Dhaka Tribune

CPD says economy to grow by only 2.5% in outgoing FY2020

The Bangladeshi economy will grow by only 2.5% in the outgoing 2019-20 fiscal year as most of the sectors contributing to the country’s Gross Domestic Product (GDP) have been hit hard by the Covid-19 pandemic, says the Centre for Policy Dialogue (CPD).

In a virtual briefing on Sunday, the independent think tank also said poverty may rise to 35% in 2020, up from 24.3% in 2016.

Bangladesh’s GDP growth hit an all time high of 8.15% percent in the previous 2018-19 fiscal year.

CPD made the projections during its pre-budget briefing titled ‘Challenges of Policy Making in Times of Pandemics: State of the Bangladesh Economy in FY2020’.

“CPD estimates suggest that the GDP growth in FY2020 is likely to come down to about 2.5%, under the most optimistic scenario if further general holidays are not announced or stricter measures are not enforced during the rest of days of the fiscal year,” it said.

It has been taken into consideration that all economic activities were affected prominently in the almost two-month long “general holiday" to varying degrees concerning all sectors of the economy, added the think tank.

The hardest hit sectors include, manufacturing, construction, hotels, restaurants, transport, storage, communication, community, social and personal services, according to CPD.

“A 2.5% GDP is not that bad, when countries like India are forecast to see negative growth,” CPD Senior Research Fellow Towfiqul Islam Khan told the pre-budget briefing. 

In a critical time like this, the focus should be on lives and livelihoods, he said.

Dismissing projections of a 6% GDP growth on the back of hefty figures in the first three quarters, CPD Distinguished Fellow Mustafizur Rahman said  the last fiscal quarter has seen a drastic fall in manufacturing and other economic activities.

Based on data from the 2016 Household Income and Expenditure Survey, the think tank found that the poverty rate would increase from a little over 24% in 2016 to 35% this year.

Consumption inequality, measured by the Gini coefficient, is expected to rise to 0.35, up from 0.32 in 2016, it projected.

 A similar analysis with a disaggregated income shock found an increase of the income Gini coefficient from 0.48 in 2016 to 0.52 in 2020.

Named after Italian statistician Corrado Gini, the Gini coefficient is a measure of statistical dispersion intended to represent the income or wealth distribution of a nation's residents, and is the most commonly used measurement of inequality.

Based on the global economic outlook since the outbreak of Covid-19, the World Bank has projected a GDP growth of between 2% and 3% in Bangladesh while the International Monetary Fund projected a 3.8% GDP growth. 

According to Bangladesh Bank data, if the GDP growth comes down to 2.5%, it would be the lowest in 25 years since 1994, when it was 4.1%.


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