A high GDP estimation that belies expected entailments

Commuters walk in front of the Bangladesh central bank building in Dhaka, Bangladesh, September 30, 2016. REUTERS/Mohammad Ponir Hossain

A HIGH growth of the gross domestic product that the government has estimated — a record 8.13 per cent in the outgoing 2018–2019 financial year, classifying Bangladesh among the fastest growing economies — has left the growth and its quality to be questioned. Bangladesh’s economy has for more than a decade been one having the fastest growth rate, but experts and economists have come to doubt the figures that produce such a high rate and sources of growth and to question the authenticity of the government estimation. This is largely because the primary economic growth drivers and other indicators do not match the estimated rate. They are of the opinion that the economy is expected to grow at a higher rate but not as high as the government has estimated. The quality of the growth of the gross domestic product has also created concern as poverty reduction and job creation rates are not in sync with the growth rate. Inequality also keeps increasing.

Think tank Centre for Policy Dialogue in a report in April doubted the government’s provisional estimate of 8.13 per cent growth of the gross domestic product in the 2019 financial year because of a mismatch between the projected growth rate and various economic performance indicators, which include private investment, private-sector credit growth, capital machinery import, revenue collection and employment generation. While the overall productivity has not increased and income inequality has widened, some manufacturing sectors have registered a very high growth without having its commensurate reflection on export performance. The tax-to-GDP ratio and private-sector credit also registered a lower growth in the outgoing financial year compared with the previous financial year. The economy appears to be going through a jobless growth as the employment rate decreased by 0.95 percentage points in 2010–17 compared with 2000–10. The growth of revenue generation was much slow — 7.27 per cent in the first nine months of the outgoing financial year — although, think tank Policy Research Institute thinks, the growth, keeping to the high GDP growth and the growth of the manufacturing sector of 19.50 per cent, should have been much higher. Credit flow in the banking sector is also reported to have declined to 12 per cent and businesses do not get loans because of liquidity crisis. Experts and economists all think that the economy is growing at a high rate but not as high as the government has estimated.

In a situation like this, economists have demanded that the government should disclose all the data that have been the basis of the growth rate as estimated by the government. It appears from what has so far followed that the government is bent on pushing the growth of the gross domestic product higher, beyond the economic reality and shorn of what a high economic growth should entail in other spheres. The government seems to be failing to understand that the gross domestic product is not about a high economic estimation but a combined reflection of the overall economy, having economic benefits reaching all. Such an obsession with a high gross domestic product growth does not only leave the economy where it is but it also makes the government averse to reforms that could make the growth meaningful. The government must have a course correction