As per the provisional data of Bangladesh Bureau of Statistic (BBS), Bangladesh posted 5.24% GDP growth in the last 2019-20 fiscal year
Raising question about the credibility of the provisional 5.24% GDP growth in the last fiscal year, the Centre for Policy Dialogue (CPD) yesterday said the calculation of the economic growth had not taken the impacts of the Covid-19 pandemic into consideration.
It also said the gross domestic product (GDP) computation had not been based on credible data.
As per the provisional data of Bangladesh Bureau of Statistic (BBS), Bangladesh posted 5.24% GDP growth in the last 2019-20 fiscal year.
The think-tank made the observations in a virtual media briefing, titled, “Provisional Estimates of GDP Growth in FY2020 CPD’s Reaction” on Sunday.
“There is a question about the credibility of figures used in the estimation of provisional GDP growth as most of the indicators such as investment, export, and private credit growth were in the negative growth trajectories,” said Fahmida Khatun, Executive Director of CPD.
She said the impacts of Covid had not been taken into consideration in GDP estimation.
Why questions arise on GDP growth
Industry sector growth rate contributed significantly to the fall in GDP growth, which registered 6.48% growth in FY20 against 12.67% in FY19.
In the manufacturing sector, large and medium scale businesses suffered badly and its growth came down to 5.47% in FY20, which was 14.84% in FY19.
Agriculture sector recorded 2.2% growth, which was 4.1% in the previous fiscal year, while service sector growth came down to 5.32% against 6.78% in the same period, the think-tank explains.
On the other hand, export declined by 51.2% during Apr-Jun of FY2020, while only 76.8% of original ADP was implemented in FY2020.
In FY20, import of capital machinery declined by 33.8%, net FDI declined by 42.5% and revenue earnings dropped by 34.6%.
“So, where did the growth come from,” Fahmida questioned.
“The weaknesses in GDP estimation and dearth of real-time data were exposed in the GDP estimation in the time of pandemic when there is a heightened need for credible real time data. Indeed, more than half of the provisional GDP estimates are not based on credible real time data,” noted Towfiqul Islam Khan, Senior Research Fellow at CPD, in his keynote presentation.
The provisional estimates of GDP had not captured the impacts of COVID-19 pandemic in the local economy for FY2020, he added.
The provisional estimates of GDP indicated that Bangladesh economy had already been losing its steam even before the Covid-19, said Islam.
GDP growth turns a political figure
“The GDP growth turned into a political number and it created fascination among policy makers as well as politicians. They use it politically as an indicator of success,” said Fahmida.
There were no benefits in exaggeration of GDP growth and it would not help to formulate effective policy making, she added.
If GDP growth did not reduce poverty rate, generate employment and remove inequality, it was not meaningful. Growth should be inclusive, she noted.
Unreliable data bad for policy making
“If the authority concerned does not provide real data, it will give a wrong signal about poverty, employment and investment to policymakers,” said Mostafizur Rahman, distinguished fellow at CPD.
Accurate data helped the government to take the right policies, he said.
“For this reason we are urging the government to form a Statistic Commission to ensure reliability of data.”
GDP does not reflect in real life
“If the government estimation of 5.24% GDP growth and other data are accurate, poverty and unemployment are not supposed to increase, ” said Khondaker Golam Moazzem, research director at CPD.
If the private sector investment had increased in the last fiscal year, why did the government offer packages to stimulate investment, he questioned.
As per the government data, private investment to GDP increased to 23.63% in FY2020 from 23.54% in FY2019, which required a nominal growth of 10.4%. Public investment to GDP increased to 8.12% in FY2020 from 8.03% in FY2019
“A rise in private investment is indeed unexpected when the entrepreneurs have been struggling to keep the existing production capacity fully operational. Curiously, even during a year of pandemic, private investment registered a notable growth,” said the CPD.
“If the government figure is accurate, then we have to say productivity of capital has decreased significantly in the country,” said Mostafizur.
Expressing his wonder, Mostafiz said with 32% investment to GDP ratio, last year Bangladesh achieved over 8% GDP growth, which came down to 5.24% with the same investment ratio in FY20.