We cannot lie our way to progress
Before the pandemic, China was expected to grow at 6.8% the fiscal year 2019-20. However, after the catastrophic impact of Covid-19 on China and world trade, their growth estimates for FY20 is now revised to less than 2%.
This steep fall in economic growth is quite noteworthy as China has perhaps managed this crisis most effectively in comparison to most European, South Asian, and Latin American countries. Moreover, this downward revision of economic growth is not a problem.
The purpose of creating high frequency economy indicators is to inform policy-makers how the economy is performing both at the aggregate level -- through indicators like GDP, unemployment level, and inflation rate -- and how it is performing at the subsector level -- through indicators for the industrial, service, and agricultural sectors.
The logic is simple. Just like a doctor goes through different parameters of a blood sample to examine whether a patient is in good health or not -- so does an economist, who reviews a wide array of indicators to look for possible imbalances in the economy to formulate remedial policies that can address those imbalances.
Unfortunately, that entire framework for assessing the real health of the economy is increasingly being compromised in Bangladesh by manipulation of national income statistics.
To be specific, the Ministry of Finance in Bangladesh has now published figures that the country's economic growth between FY19/20 was more than 5% -- perhaps the highest in any developing country during a global pandemic.
I think any economist with an ounce of professional integrity in Bangladesh will have difficulty believing these figures -- but the Ministry of Finance in alliance with the Bangladesh Bureau of Statistics (BBS) published such grossly inflated estimates without any shame or reservation.
The question that matters now is one that needs deep introspection -- what are we trying to exactly achieve here? Is the Ministry of Finance interested in real progress by solving real economic problems?
Or has the Ministry of Finance turned itself into a propaganda machine that tells us that Bangladesh is floating over seventh heaven?
The question is: If Bangladesh barely faced any adverse economic impacts of Covid-19, then we must reconcile these statistics with a negative RMG export growth of 18.1%; and remittance growth that took a nose dive from 20% in the first seventh months to 10.9% by the end of FY20.
Most important, how can an economy that is growing at 5.24% simultaneously experience a “negative” revenue growth of 3.79% -- when the general trend over the last 45 years has been that revenue growth has always been systematically higher than actual growth rate?
Even if we look at the anecdotes to make a sense of what is happening in the economy, private sectors have slashed their wages, large factories were operating with barely 50-60% capacity till end of June, our daily electricity generation dipped as low as 7,017 MW-- a proxy for the intensity of economic activities in the country.
But this is not the end of the story. As numerous stories indicate, thousands have left Dhaka due to no jobs in the informal service sector. House rents have been slashed as occupants are increasingly failing to pay their rents -- and some have even left for their villages as they cannot afford the rental market in Dhaka.
More specifically, in a survey of 5,471 households in urban slums and rural areas earlier in April by BRAC and PPRC, it was identified that the average income in the slums of Bangladeshi cities and among the rural poor has dropped by more than 80% since the outbreak.
So, how can an economy, that has been robustly growing at 5.24% in FY19/20, produce such adverse economic shocks? How exactly can we rationalize these adverse anecdotes from the main streets with the “manufactured data” by the Ministry of Finance and BBS?
There is little debate that under the bold leadership of Hon’ble Prime Minister Sheikh Hasina -- Bangladesh is viewed in the world with hope. Our narrative is no longer one that of a “basket case” -- but one where people are rising on the economic ladder.
Bangladesh has systematically maintained decent more than 7% average growth for nearly a decade, which has lifted (according to World Bank and UNDP) at least 20 to 25 million people out of poverty between 2010 and 2020. These improvements happened because impactful policies were formulated with the help of authentic data.
Yet, by systematically compromising with the integrity of national statistics by a pool of career bureaucrats (whose only aim in life is to retire as a senior secretary), they are undermining the long-term economic vision of Honourable Prime Minister Sheikh Hasina.
At present, insane and absurd norms are being established within our economic management. Ludicrous growth and investment targets are being fixed and then BBS is colluding with the Ministry of Finance to validate these absurdities.
We must all remember that if we want to remain true to the economic aspiration of the Honourable Prime Minister of turning this country into a developed nation within our lifetime -- a feat that was achieved in the past by the likes of South Korea, Singapore, Malaysia, and now China -- then fake PR and “manufactured statistics” cannot take Bangladesh to the promised land.
This is because, no matter what we do, truth always has a way of catching up, and no matter how imperfect the discipline of economics is as a science, when the numbers do not add up, even the most beautiful lie will break down like a house of cards.
Dr Ashikur Rahman is a Senior Economist at the Policy Research Institute of Bangladesh (PRI). He can be reached at [email protected].