BBS claims sharp V-shaped recovery, economists differ

The Bangladesh Bureau of Statistics (BBS) has come up with the final figure of the Gross Domestic Product (GDP) of Bangladesh in the fiscal 2020-21, reflecting a sharp and clear V-shaped recovery from the devastating impacts of Covid-19 on the economy.

Nearly eight months after the fiscal year had ended, the BBS revealed that the economy achieved 6.94% of growth in the last fiscal year – a little more than double the growth of 3.45% in FY20.

Most think tanks from home and abroad were anticipating an L-shaped prolonged recovery path for Bangladesh with about 4% of growth. Some of the organisations predicted a U-shaped moderate growth path with more than 5% of growth.

But the final estimation of the BBS surpassed the projection of all development partners. Even the final growth figure of the BBS is 1.51 percentage point higher than its preliminary estimation.

Analysing the performance of the first nine months of the fiscal year and projection of the last three months, the national statistical organisation earlier estimated 5.43% growth for FY21.

The huge jump in growth in the final calculation made policymakers and officials of the government happier. But what economists and independent experts find does not match the reality.

Planning Minister MA Mannan revealed the final GDP report of the BBS at a press briefing following the meeting of the Executive Committee of the National Economic Council (Ecnec) on Tuesday at the NEC auditorium in Dhaka.

He said, "The GDP growth for the last fiscal year reached 6.94%, which was 5.43% during the provisional estimate, however by the end, it increased by 1.51 percentage points."

The GDP growth edged down to three-decade-low 3.45% in FY20 due to the Covid fallout, said the BBS final report on 5 August last year.

Calling the growth "a miracle" amid the pandemic, the minister said, "Our GDP growth upturned to nearly 7% while many other countries took a hit."

He said the prime minister is very happy with the achievement and she has dedicated this to the countrymen.

"As per the initial estimation, the size of GDP was $410.82 billion, which later rose to $416.26 billion," Minister MA Mannan added.

Meanwhile, Bangladesh's per capita income has increased to $2,591 that previously was estimated to be $2,554.

State Minister for Planning Dr Shamsul Alam said, "The growth in national GDP is proof that our economy has bolstered since we have made progress in sectors, such as exports and remittances."

The IMF projected 4.60% of GDP growth for the last fiscal year, while the projection of the World Bank and Asian Development Bank was between 5% and 5.5%. 

Asked how the BBS estimate differs from the other projection, Shamsul Alam said development partners and any other organisations have no capacity to estimate the final figure of the GDP. They make projections using data from the BBS and some major economic indicators. That is why the final figure of the BBS is more appropriate than the others', he added.

The planning minister said, "We are confident in data generated by ourselves. We rely on the BBS data." 

He asked for positive criticism and research to find a mismatch in the BBS Data if there is any.

Dr Ahsan H Mansur, executive Director at the Policy Research Institute of Bangladesh, told The Business Standard that 6.94% economic growth does not reflect the reality of the last fiscal year.

Mentioning a 5.43% provisional growth, he questioned what was the major change in the economy in the last three months that boosted the growth to near about 7%?

Economic activities were affected by the Delta variant of Covid-19 in April and May. Only the month of June was relatively stable, he said, adding that a 5.5% growth for FY21 is relevant, he added.

He further said investment in the final calculation increased by only 2.19% when compared with the provisional estimate. 

A 1% growth in the GDP requires at least 4% of investment in Bangladesh. "How an additional 2% investment can raise GDP by 1.51%?," questioned the former IMF economist.

"It is difficult to find the link between the growth data provided by the BBS and the reality," said Dr Zahid Hossain, former lead economist of the World Bank's Dhaka office.

He said the resource balances of exports and imports widened by more than 32% in the last fiscal year. 

The government expenditure increased by only 8.60% over the year in a nominal term, which would be around 3% excluding the inflation rate. There was stagnation in investment as reflected by a lower rate of private sector credit growth, he added. 

Areas where GDP growth increase

The size of the GDP reached Tk3530,185 crore in the last fiscal year in a nominal term having 11.35% higher growth than Tk3170,469 crore in FY20. The BBS found GDP worth Tk3484,033 crore in the provisional estimate, which increased by Tk46,152 crore in the final estimation.

Per capita GNI was Tk197199 in FY20, which reached Tk219,738 in FY21. The income of each person increased by Tk22,539 on average, up by 11.43% over the last fiscal year.

Analysing the BBS data, it found that the rebound of the industry sector helped the economy achieve remarkable growth in the last fiscal year.

The final calculation of the BBS found 10.29% growth in the industry sector, which was only 6% in the provisional estimate. The sector grew only by 3.61% in FY20.

The share of the industry reached 34.61 according to the final estimate, which was 33.89 in the provisional estimate.

The agriculture sector finally grew by 3.17% in the last fiscal year, which is 0.8 percentage points higher than the provisional estimate of 2.37% but 0.25 percentage points lower than in FY20.

The share of the sector to GDP dropped to 12.09% in FY21 from 12.44% in FY20.

Growth of the service sector and its relative share to the GDP reduced in the final estimation compared to the provisional estimate.

The BBS earlier found 5.86% growth in the service sector, which dropped to 5.73% in the final estimate. Share of the sector reduced to 53.30% of the GDP in the last fiscal year from 53.42% in FY20.