BBS almost halves FY20 GDP growth

The growth in gross domestic product (GDP) edged down to 30-year-low 3.51% in the fiscal 2019-20 due to Covid fallout, said the Bangladesh Bureau of Statistics (BBS) in its final report Thursday.

The agency had earlier projected that the GDP growth in that fiscal year would be 5.24%. However, the final report, which came out more than a year after the projection, said the GDP growth decreased by 1.73 percentage points.

Apart from the final GDP count in 2019-20, the BBS report also revealed 5.47% initial growth in the recently concluded FY2020-21.

The national budget for the fiscal 2020-21 set the growth target at 8.2% which was later trimmed to 6.1% in the revised budget thanks to a lacklustre private sector credit flow, capital machinery and raw material import, ADP implementation and public and private investments.

According to the BBS, the 2020-21 GDP growth was 2.73 percentage points less than the main national budget and 0.63 percentage points less than the revised one.

Size of the GDP stood at Tk30,11,065 crore in the FY2021, which was Tk27,39,332 crore in the FY2020. The GDP observed 9.92% nominal growth in terms of currency. The nominal growth was 7.74% in the FY2020.

The government, however, is positive about the growth rate achieved in the FY2019-20 as the pandemic fallout crippled the world economy. Plus, the authorities hope the growth rate in FY21 will be more in the final report than the initial estimate.

State Minister of Planning Dr Shamsul Alam said, "Our 3.52% growth in the fiscal 2019-20 is very positive though the rate fell in the final report. In that time, neighbouring India, the USA and the entire Europe registered drastic falls in their GDP. Our growth rate fell, but did not log negative – this is the strength of our economy."

He said the nationwide lockdown followed by the Covid outbreak in Bangladesh depressed the economy last year.

"But the exports and remittance provided us with support, while the agri-production also contributed to the growth rate," he noted.

Dr Shamsul Alam appreciated the government for stimulus packages. "While the pandemic upset the world, our growth was still positive due to our macroeconomics management. This is a tremendous achievement," he added.

He said the BBS initial growth estimate for the fiscal 2020-21 would edge up in the final report as the government took several measures to maintain the GDP growth rate and implemented those properly.

Industries, services take a beating in growth

The growth in industrial production in FY2019-20 dropped to 3.25% although the rate had been more than 12% for the last couple of years. The initial estimate for the fiscal 2020-21 suggests growth in industrial production increased slightly to 6.12% – marking the sector's GDP contribution to 30.91%.

The manufacturing sector logged more than 14% growth in the fiscal 2018-19 that slipped to 1.8% in FY20. The growth turned around to 5.77% in the last fiscal year.

The growth rate in the service sector was 4.16% in FY2019-20. The rate in FY2020-21 edged up slightly to 5.61% – raising the sector's contribution to the GDP to 55.79%.

The growth rate in agriculture edged up by 3.92% in FY2019-20 to 4.59%. The rate fell slightly in the following fiscal year to 3.45%. Agriculture's contribution to the GDP was 13.29% last year. 

Big blow to investment

The BBS has claimed that despite the increase in government investment in the last two fiscal years, the overall investment against the GDP has declined, as private investment has taken a battering.

According to the agency, investment fell to 29.92% of the GDP in the last financial year, which was 31.57% two years ago.

During the same period, private investment came down from 23.54% to 21.25%.

Public sector investment, however, grew from 8.03% of the GDP to 8.67% in the same period.

What do experts say?

Dr Ahsan H Mansur, executive director of the PRI, said the calculation of growth rate given in the preliminary account for FY20 was not realistic. However, the actual growth calculation came a little closer to reality.

"We should make realistic estimates in areas where there has been negative growth around the world," he opined.

"The growth forecast initially calculated for the fiscal 2020-21 will come down in the actual calculation. This is because the economic situation has not improved much in the last financial year."

Stressing realistic calculation of growth, the noted economist said, "Growth estimation of 7% or 8% would appear absurd now. This is because lockdown has been going on since the beginning of the current financial year. It is unknown for how long this will continue. It will also be difficult to ensure vaccination for all. This will have a far greater impact on future growth."

In this regard, Dr Zahid Hussain, former lead economist of the Dhaka office of the World Bank, said every year there big dissimilarities are observed between the growth figures of the BBS and the reality.

But this time, he thanked the planning minister for taking into account the reality in the calculation by the BBS.

He said the impact of the coronavirus was more damaging to the industry and services sector in 2020. As corona infection was not so prevalent in rural areas at that time, the production in agriculture was good. The report of the BBS this reality.

Citing import-export, spending, VAT collection and ADP implementation, the economist said it is clear that the economy was in a better condition in 21 FY compared to 2019-20.

"Since the growth estimate did not include the last three months of the 2020-21 FY, the effects of the Delta variant spread are out of the calculation. The virus infection may reduce the growth figure in the final report," he added. 

He said maintaining the growth rate in the future would be challenging too since the virus situation worsens with no sign of improvement.