Bangladesh being an LDC has wonderfully marked commendable and consistent GDP growth over 6 percent for almost the last decade and amazed many developed countries and international financial organization such as JP Morgan and Goldman Sachs which featured high aspiration of our economy as Frontier five and Next Eleven. Against this persistent growth backdrop, government has envisioned economic graduation by 2021 featured by 8 per cent growth trajectory, 6 percent FDI of GDP, 35 percent investment of GDP, higher per capita income, stable EVI and HDI by 2021. GDP performance escalation always has been exclusively indispensible in determining economic shift and recognition. Economy often undergoes enormous debate on growth rate rise as growth rate has been hovering in 6 per cent trap for almost a decade and struggling to get rid of this stagnation to get to economic graduation. In fact, GDP growth is hard-earned and most expected and deviation and any fallacy can’t be acceptable.The stark reality of GDP growth hike
We all need to reminisce that slow and steady wins the race but rapid and unsolicited growth often loses the economic race
AKM Asaduzzaman Patwary
Bangladesh being an LDC has wonderfully marked commendable and consistent GDP growth over 6 percent for almost the last decade and amazed many developed countries and international financial organization such as JP Morgan and Goldman Sachs which featured high aspiration of our economy as Frontier five and Next Eleven. Against this persistent growth backdrop, government has envisioned economic graduation by 2021 featured by 8 per cent growth trajectory, 6 percent FDI of GDP, 35 percent investment of GDP, higher per capita income, stable EVI and HDI by 2021. GDP performance escalation always has been exclusively indispensible in determining economic shift and recognition. Economy often undergoes enormous debate on growth rate rise as growth rate has been hovering in 6 per cent trap for almost a decade and struggling to get rid of this stagnation to get to economic graduation. In fact, GDP growth is hard-earned and most expected and deviation and any fallacy cant be acceptable.
Of late, the ministry of planning has unveiled the provisional GDP growth and key economic indicators that Bangladesh will end up in FY 2015-16. Indeed, the growth to be is beyond the growth projected while the fiscal budget was declared in June 2015. This recent growth seems a bolt from the blue as it happened beyond many credential forecasts by IMF, ADB, WB, Bloomberg and local leading independent research organizations earlier.
GoB forecasts the provisional growth of 7.05 percent characterized and underpinned by agricultural, industrial sector contributions hike in GDP as well as better management of economy with other economic indicators and indices. The BBS has disclosed the facts and figures to justify the provisional growth until the end of ongoing fiscal-year. As soon as the statement was made public, enormous reaction was made against this growth.
Most of the countries use mixed approaches either of income and production or alternative as standalone approach is not sufficient without any exceptions in Bangladesh. The USA has got separate institute BEA bestowed to forecast and workout quarterly GDP using RPI and CPI. Independent organization ONS in UK manages the quarterly GDP statistics using different indices by means of production, income and expenditure GDP calculation methods. The recent divulge of provisional GDP has created a shockwave across the country and globe as it appears surprisingly unconvincing to many. This fiscal year is exceptional from the past years since government hardly made same instances before the fiscal year completion. The BBS has always been criticised for its conventional statistical tools, measures use and inaccuracy and inconsistency of the data collection, interpretation which often triggered commotion with different objective application of this data. BBS holds inflation, economic data for GDP another necessary assessments. Due to inefficient technical expertise, human resource and updated techniques shortcomings, this organization cant perform as expected.
The recent employment generation statistics mismatch between Planning Commission and BBS has been talk of the town as the employment generation meant to be .3 million against 1 percent of GDP growth and for 7 percent growth the employment number should be around 2.1 million but this mismatch misled the nation and economy.
Upon the GDP declaration, the quantitative clarification, assessment outlined to justify GDP growth had gross flaws in calculation of sectoral contribution, assumptions and method applied. The implausible figures made in the statement are not commensurate with the projection and real-life economic context. The following anomalies, maladjustments were noticed which actually made people felt this growth unacceptable and unjustified. Many disagreements were rocked on the unreliable statistics due to difference of the economic outlook of IMF growth 6.6 percent and ADB 6.4 percent projection. Following points outlined will justify why this growth is to large extent unacceptable:
The GDP base year has been changed in 2005-06 which has positive impact to stretch the GDP value.
The private sector borrowing and investment remains slow and lowering trend around 21.78 percent in FY2015-16.
The foreign remittance has been declining over last three months. For real GDP, inflation cant be measured, projected but assumed in advance.
The GDP deflator is on continuous increase to show higher value of products for large GDP value.
The agricultural growth is down relative to previous year and below the target.
The nominal GDP meant to be $192 Billion subject to 7 % provisional growth but the provisional nominal GDP is forced to be $221 Billion.
The industry and GDP ratio was shown around 32 percent which meant to be achieved in 2019 as per 7th five-year plan. The industry growth was around 10 percent which doesnt seem realistic as manufacturing sector growth has slump due to persistent power and energy supply shortage and other tangible investment bottlenecks.
Industry growth plan in seventh five year plan also was outweighed in this current fiscal year GDP assessment. Employment generation and increase of disposal earnings have not progressed significantly except govt. officials against the FY2015-16 target. The BBS record shows .3 million job creation against 1.3 Million.
The projected GDP assessment has been presented on constant and current price methods but remains unclear of technique used in provisional calculation.
Industry sector contribution subsectors dont match the industry subsector of Seventh Five-year plan. SME is a popular acronym but GDP shows large and Medium Industry contribution together.
The universal GDP calculation formula is practiced and followed irrespective of any country including Bangladesh is aggregate Consumption + Investment (Public, Private) + Export-Import. In the aggregate investment, the amount of public investment remains unsatisfactory due to slow ADP implementation.
The GDP growth also needs to be justified with higher per capita income which has also recently increased to $1466 and seemed unacceptable too. And, this $150 rise doesnt have any convincing justification considering the macro-economic mobility except pay hike for 1.1 million government employees. But 1.1 million employees have not got equal percentage of pay rise which cant massively change the economic conditions of remaining population with cascading effects.
Poverty and extreme poverty situation hasnt improved as expected and Gini Coefficient does not have any notable change too.
Revenue target was down by 16 percent and ADP is cut by 8 percent in current FY2015-16.
Against this aforesaid clarification, the provisional growth of GDP is apparently distant from real-life economic perspective and destined to embrace the envisioned economic graduation higher growth.
Framing and imitating a positive and inspiring economic picture and dissemination using imprecise statistics may not be difficult to generate hope and make complacent our mass and policy leaders but the legacy of this unconvincing economic escalation will lead to aggregate burden, miseries on economic lifeline, history as tax payers and mass people have to pay for. This sort of pre-mature growth is likely to shake up and enfeeble the soothing and sustained economic development.
The blame game between planning ministry and international development agencies has been spotlighted which doesnt look befitting at all.
We all need to reminisce that slow and steady wins the race but rapid and unsolicited growth often loses the economic race. Learning from many countries across the world especially Europe and USA can be replicated since economic growth of those economies remains low end 2.5 percent. But inclusive, equitable and sustainable growth and socio-economic welfare is more concentrated than merely growth escalation which brings into shared blessing to their socio-economic condition. We always need to emphasize and focus on inclusive, substantial and sustainable economic growth with the long-held spirit of sustainable development goals rather than merely GDP building which will later be followed as ideal role model with unanimous recognition and cherishing our economy rather than being dishonored. As Bangladesh left mark of excellence in MDG 2015, being a brand leader of success for LDCs, we should have shown our pragmatism and planned commitment and professionalism in every aspect of economy. We need to be concerned and focused on our further economic course of actions so that balanced and appropriate economic indicators management are held to facilitate the terrain of economic mobility with credential to continue towards achieving economic graduation by 2021 and SDG 2030.
The writer is Research Fellow, Head of RD, DCCI
