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The Centre for Policy Dialogue (CPD) yesterday raised questions over the economic growth figure of 5.24 per cent estimated by the Bangladesh Bureau of Statistics (BBS) in the just-concluded fiscal year.
The obvious repercussions of the pandemic on the economy were not adequately reflected in the provisional GDP growth estimate, released by the statistical agency last week, said the independent think-tank.
Questions arise regarding the accuracy as all the major indicators, except for remittance, had been in the negative, said CPD Executive Director Fahmida Khatun at a virtual press briefing.
Economic growth figures are used as a tool to gain leverage in politics, she said.
“An infatuation with growth has been created,” she said, adding that the GDP growth has become “a political number” and the growth data being portrayed as a sign of the government’s successes.
But GDP growth does not turn meaningful until it is inclusive and the benefits of growth are distributed among all, she said, citing unemployment, rising inequality and the sluggish pace of poverty reduction in the country in recent years.
In its review of BBS’s data for fiscal 2019-20, CPD said private sector credit growth had been the lowest in a decade.
Industrial production, export-import of capital machinery, foreign direct investment and revenue collection also declined last fiscal year, resulting from a downturn in the global and domestic economy for the outbreak of the respiratory virus, it said.
“The effect of the Covid-19 is historic on economies including Bangladesh. The effects are unprecedented,” Khatun said.
But this was not shown on the GDP growth data, she added.
CPD shared its view less than a week after the state-run BBS said the Bangladesh economy grew at the “respectable rate” they had calculated — all the while large swathes of the global economy plunged into recession for the outbreak of coronavirus from Wuhan, China.
The BBS estimate beat forecasts by Washington-based multilateral lenders World Bank and International Monetary Fund that the economy would grow between 1.6 per cent and 3.8 per cent in fiscal 2019-20 for the pandemic-whiplash.
The Asian Development Bank said the Bangladesh economy would expand at 4.5 per cent while CPD projected that the GDP growth would be no more than 2.5 per cent.
In its briefing, the organisation did not revise its previous forecast; rather, it stated that the economy grew close to its previous projection of about 2.5 per cent in fiscal 2019-20.
All economic activities, from manufacturing, construction, hotels and restaurants, transport, storage and communication, community, social and personal services sectors, were hit the hardest during the coronavirus-induced shutdown for almost two months, CPD said.
The provisional GDP estimates could not capture the significant adverse impacts of the Covid-19 pandemic, said CPD Senior Research Fellow Towfiqul Islam Khan, presenting a paper at the event.
Many lost jobs while the income of a large section dropped.
“Indeed, more than half of the provisional GDP estimates are not based on credible real-time data,” he said, adding that overall growth of the economy would drop from the provisional estimate if updated data were used to do the calculations.
CPD cited data on the rise of private investment used by BBS in the GDP estimate, stating that the rise was indeed unexpected when the entrepreneurs have been struggling to keep their existing production capacity fully operational.
BBS estimated that public investment as a share of GDP also increased in fiscal 2019-20. Overall, investment as a share of GDP increased to 31.75 per cent in fiscal 2019-20 from 31.57 per cent the previous year, CPD said citing the data from the state-run statistical agency.
The GDP growth estimate did not reflect the reality as proxy indicators told a different story, said CPD Distinguished Fellow Mustafizur Rahman.
If the estimations are correct, the nominal GDP growth rate should be about 11 per cent in fiscal 2019-20, he said.
Then the question arises on why the revenue collection performance is such, he said citing declining receipts.
The economy did not grow in the fourth quarter of the year owing to the countrywide general shutdown. The growth was negative.
“We think that the assumption that we made, projecting a 2.5 per cent growth of the economy, is correct.”
A wrong signal would go to the policymaking level unless the estimates were carried out properly. And this will not help in the framing of proper policies, Rahman added.
The shutdown affected the services sector, said CPD Research Director Khondaker Golam Moazzem.
The government expanded social safety nets and announced more than Tk 100,000 crore as a stimulus to reinvigorate the economy from the wreckage of the global pandemic.
If the economy grew at this pace, there would have been no need for the measures to revive the economy, he said.
CPD demanded public release of the background data used in calculating the national income to clear the ambiguities and questions regarding the estimation process.
It also urged the government to let the statistical agency to enjoy more independence and form an independent commission to ensure reliability and integrity of data.
As the growth data has become a political number, the independence of people engaged in data collection has been affected, Khatun said.
Moazzem pointed out that South Africa had an independent statistical commission.
Rahman said the government should ensure the integrity of data for its enlightened self-interest.
(TDS)
