Incorrect export data may affect reserves, GDP, economic recovery: Economists
The worrying part of the detection of this data anomaly is for how many years it has been happening, said Dr Fahmida of CPD
The $10 billion overstatement in exports will not only negatively impact Bangladesh's foreign exchange reserves, GDP growth, and per capita income but also necessitate a reassessment of government policies based on faulty data, economists warn.
Also, misleading economic data could lead both domestic and foreign investors to make poor investment choices, undermining business confidence and development in the country, they say.
"Direct impacts will be on the foreign exchange reserves as exports and remittances are the primary sources of forex for Bangladesh," said Dr Fahmida Khatun, executive director of the Centre for Policy Dialogue.
Impacts will be on all other economic indicators, be it GDP size, growth rate, or per capita income, she said. Indirectly, investments and employment might be affected as investors look at a country's growth and consumers' purchasing power, Fahmida noted.
Keep updated, follow The Business Standard's Google news channel
"It is a grave concern," said Dr Selim Raihan, professor of economics at Dhaka University, regarding the incorrect export data. "It means that the data we see about GDP, growth rate, or balance of payments may not be accurate."
Selim Raihan, also executive director of the think tank South Asian Network on Economic Modeling (Sanem), said the detection of this anomaly in exports indicates that the ongoing economic crisis is deeper than it appears. He also mentioned that the ongoing economic recovery efforts will be hampered.
"Also, the government should revisit the proposed budget to ensure it is based on accurate estimates," said Dr Raihan.
Terming data manipulation as a very bad practice, Dr Salehuddin Ahmed, former governor of the Bangladesh Bank, said a significant reduction in export figures might impact foreign exchange reserves and exchange rate as well.
Dr Salehuddin also questioned the utilisation of the Export Development Fund provided by the central bank at a cheaper rate. "Was the EDF properly used?" he said.
Biru Paksha Paul, a professor of economics at the State University of New York at Cortland, said the government might have to revise the GDP growth after the correction of misleading data.
However, he termed the recalculation of the balance of payments (BOP) data and coordination between the Bangladesh Bank, the National Board of Revenue and the Export Promotion Bureau are a positive move.
"It is better late than never," said Paul, also a former chief economist of the Bangladesh Bank. But he said he did not expect so much discrepancy that has been detected.
He also said this correction in export figures will not significantly affect forex reserves.
Wrong data for how many years?
The worrying part of the detection of this data anomaly is for how many years it has been happening, said Dr Fahmida of CPD. "Are we making policies for years based on wrong numbers and unreliable data?" she asked. "Is this why our policy prescriptions often don't work properly?"
She acknowledged that recalculating GDP or exports will not be an easy task, but the government should attempt to provide an accurate picture of past years.
"We understand that export proceeds often do not arrive on time or in full due to disputes between buyers and sellers, or uncertainty in the exporting country," she said. However, an overstatement of more than $10 billion is unbelievable, she noted.
Was data anomaly intentional or unintentional?
Dr Selim Raihan of Sanem questioned whether this miscalculation of data was intentional or a technical glitch, emphasising that the government must resolve it as policy decisions based on erroneous data fail to accurately reflect the true economic situation.
"Those who are responsible has to answer," he said.
He also lamented why Bangladesh has yet to develop a credible data system, despite economists and researchers having pointed out the issue for years.
Biru Paksha Paul said over-optimism by some government agencies might have led to this overstatement in export figures.
How miscalculation can be avoided
If the central bank calculated export figures based on the realised data, this miscalculation or overestimation could be avoided, according to Paul.
Dr Raihan stressed the use of technology. "The technology is available – there is no excuse for miscalculation," he added.
