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Professor Mustafizur Rahman on growth within political turmoil

Published in The Daily Star on 15 May 2015.

GDP growth number surprises analysts
Growth to accelerate 6.5pc this fiscal year

Sajjadur Rahman

The economy was not as badly hurt as everyone expected by the three-month political turmoil inflicted by the BNP-led opposition alliance

Provisional data released by the planning ministry yesterday showed the economy is on track to log in 6.51 percent year-on-year growth for the current fiscal year, which is the highest in three years.

Last fiscal year, when the country too had a similar bout of political upheaval, the economic growth was 6.06 percent, which was revised down from 6.1 percent.  The government’s GDP figure is much higher than the analysts and development partners’ estimates.

For instance, the World Bank revised down Bangladesh’s growth forecast to 5.6 percent in light of the political developments of the January-March period.

The multilateral lender estimated that the country lost $2.2 billion (approximately Tk 17,150 crore) or 1 percentage point of GDP for the turmoil.

Similarly, the Asian Development Bank has revised down its GDP growth forecast for Bangladesh to 6.1 percent. It did not specify the losses the incurred from the political unrest.

The Centre for Policy Dialogue (CPD) found the political unrest caused GDP losses of 0.55 percent or Tk 4,900 crore.

Interestingly, Prime Minister Sheikh Hasina herself said the country had incurred a loss of over Tk 1.2 lakh crore in the first 52 days of the unrest.

Yet, it seems from the government data that this massive economic loss could not bring down the country’s GDP growth.

“These provisional figures appear to be higher than what was indicated in term-loan disbursement, investment, revenue generation, exports and the adverse impacts of the political turmoil on manufacturing and services sectors,” Mustafizur Rahman, executive director of CPD, said.

“When the final figure will come up, we will know the real growth rate,” he added.

Salehuddin Ahmed, former governor of the central bank, echoed the same.

He said the GDP growth rate this year could be around 6 percent given the impact of the three-month political unrest. “How can this year’s growth rate be 6.5 percent when investment and export are declining?”

While briefing the media, Planning Minister AHM Mustafa Kamal said if there was no political turmoil the GDP growth rate could have been 7 percent.

He said the 6.5 percent growth is only being achieved due to the valiant nature of the truck drivers, the industrial workers and day labourers.

“They went on work despite the risks to their lives and kept the wheels of the economy rolling. As the planning minister, I am grateful to them.”

Kamal said the investment-to-GDP ratio has increased to 28.99 percent this year, up slightly from last year’s 28.58 percent.

The private and public sector’s contribution stands at 22.39 percent and 6.6 percent respectively, said the minister.

Government data shows the farm sector’s contribution and growth rate have gone down this fiscal year from the last.

On the other hand, the stakes and growth rate of the industrial and services sectors in the GDP have increased this year.

The agriculture sector grew 3.04 percent this fiscal year, down from 4.37 percent a year ago.

The industrial and services sectors grew 9.6 percent and 5.82 percent respectively.

Last fiscal year, they clocked in growth of 8.16 percent and 5.62 percent.

 

Published in New Age

Govt’s 6.51pc GDP growth calculation raises eyebrows

Staff Correspondent

The country’s economy has posted a growth of gross domestic product (GDP) by 6.51 per cent in the current fiscal year (2014-15) despite political unrest for three months of the second half of the fiscal year, according to a provisional estimate of the Bangladesh Bureau of Statistics.

Economists, however, termed the estimate unacceptable saying that the GDP growth at 6.51 per cent is impossible and exaggerated considering the political turmoil and vandalism for more than three months of the fiscal year.

Planning minister AHM Mustafa Kamal on Thursday said that the provisional data showed GDP grew by 6.51 per cent in the current fiscal year and he blamed the political unrest, blockades, hartals and vandalism by BNP-led opposition parties for not achieving the GDP growth target of 7.3 per cent set for the year by the government.

Per capita income of the country also rose to US$ 1,314 in the year from that of US$ 1,190 in previous fiscal year, Kamal said at a press briefing after the National Economic Council meeting at NEC auditorium.

The actual economic growth in the last FY2013-14 finally stood at 6.06 per cent against the provisional estimation of 6.12 per cent, the data revealed by the planning ministry showed.

‘GDP would grow by around 7 per cent in the year if there would not be political unrest and vandalism in some months of the year,’ he said.

But, 6.51 per cent is not also bad, he said.

Adviser to the former caretaker government Mirza Azizul Islam told New Age that the rate of economic growth was unacceptable as the impact of three months political unrest was not reflected in the estimates.

‘There is no credibility of such growth amid unfavorable environment as services sector, the biggest contributor to the economy, could not perform for at least three months,’ he said.

The government may provide such estimates as others do not have statistics, he said.

‘GDP growth at 5.6 per cent estimated by the World Bank is logical to me. Even growth at 6 per cent seem to be exaggerated,’ he said.

Kamal, however, said that the economy grew on higher growth in services and industry sectors, and remittance inflows, among other positive indicators.

The Centre for Policy Dialogue earlier estimated that the country lost 0.55 per cent of the gross domestic product or Tk 4,900 crore due to the political unrest during January to mid-March in the current fiscal year.

CPD executive director Mustafizur Rahman told New Age on Thursday that the GDP calculation of 6.51 per cent seemed to be an over estimation considering the loss to economies due to political unrest, the investment scenario and export performance.

‘It’s a provisional data, lets see what the final calculation stands,’ he said.

Different multilateral lending agencies including World Bank and Asian Development Bank earlier projected lower GDP growth for the year.

World Bank in April downsized the GDP growth projection to 5.6 per cent for the current fiscal year due to the impact of political turmoil in the second half of the fiscal year from its earlier forecast of 6.6 per cent.

ADB also cut its forecast to 6.1 per cent from its earlier projection of GDP growth at 6.4 per cent.

According to the BBS statistics, services and industry sectors grew in the year at higher rate than that of the last year while agriculture sector saw a sluggish growth.

In the current fiscal year, industry sector grew at highest 9.6 per cent against the growth rate of 8.14 per cent in last fiscal year.

Services sector grew by 5.83 per cent and agriculture sector grew by 3.04 per cent which were 5.62 per cent and 4.37 per cent respectively in previous fiscal year, the data showed.

The services sector contributed the highest 56.42 per cent to the GDP in the current fiscal year followed by industry sector with 27.98 per cent and agriculture sector with 15.59 per cent, the data showed.

In last year, services, industry and agriculture sectors contributed 56.18 per cent, 27.71 per cent and 16.11 per cent respectively.

The contribution of services and industry sectors to the GDP increased a little bit in the year while the contribution of agriculture sector decreased significantly.

The total size of the GDP stood at Tk 15.13 lakh crore in current price in the year which was Tk 13.44 lakh crore in previous fiscal year.

Kamal said that Bangladesh was one of the four countries in the world which achieved GDP growth at the rate of more than 6 per cent in four years in a row.

Bangladesh’s position in the world was now 58th considering the per capita income of US$ 1,314 in nominal calculation.

Per capital income based on purchase power parity is now US$ 3,190, he said.

BSS statistics showed that the investment-GDP ratio also increased slightly in the year to 28.99 per cent from that of 28.58 per cent in previous year.

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