The Centre for Policy Dialogue (CPD) has questioned the 5.2 percent GDP growth estimated by the Bangladesh Bureau of Statistics (BBS) in the just-concluded fiscal year 2019-20.
The independent think-tank said the fallout of the Covid-19 pandemic on the economy has not been reflected enough in the provisional GDP growth estimate released by the statistical agency last week.
Questions regarding accuracy have emerged as all major indicators, except remittances, had been negative, said CPD Executive Director Fahmida Khatun at a virtual press briefing.
The civil society organisation said private sector credit growth had been lowest in a decade while industrial production, exports as well as imports of capital machinery, foreign direct investment and revenue collection also declined in the last fiscal year. This is likely due to a downturn in global and domestic economy following the outbreak of the coronavirus.
“The effect of Covid-19 is historic on economies including Bangladesh. The effects are unprecedented,” she said.
The BBS estimate beat forecasts by the Washington-based multilateral lenders — the World Bank and the 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, while the Asian Development Bank said the Bangladesh economy would expand at 4.5 per cent.
The CPD also projected that the GDP growth would be no more than 2.5 percent in the last year.
In its briefing, the organisation did not revise its previous forecast rather said economy grew close to its previous projection of around 2.5 percent in the fiscal year 2019-20.
CPD also said all economic activities from manufacturing, construction, hotels and restaurants, transport, storage and communication, community, social and personal service sectors were hardest hit during the coronavirus related shutdown for almost two-months.
Provisional GDP estimates could not capture the adverse impacts of Covid-19 pandemic, said CPD Senior Research Fellow Towfiqul Islam Khan, presenting a paper at the event.
The CPD cited data on the rise of private investment used by BBS in the GDP estimate and said the rise in private investment is indeed unexpected when entrepreneurs have been struggling to keep the existing production capacity fully operational.
BBS estimates that public investment as a share of GDP, also increased in the Fiscal Year (FY) 2020. Overall, investment as a share of GDP increased to 31.75 percent in FY2020 from 31.57 percent the previous year, said the CPD citing BBS data.
CPD Distinguished Fellow Mustafizur Rahman said if the estimations are correct, nominal GDP growth rate should be around 11 percent in the fiscal year 2019-20. The question is why the revenue collection fell, he said.
He said the economy did not grow in the fourth quarter of the year owing to Covid-19 related shutdown. Instead the growth was negative.
A wrong signal will go to the policy level unless estimates are done properly. And this will not help proper policy framing, added Rahman.
The CPD demanded public release of the background data used to calculate the national income in order to clear ambiguity and questions regarding the estimation process.
It also urged the government for giving independence to the statistical agency and of formation of an independent commission to ensure reliability and integrity of data.