Originally posted in The Business Standard on 10 May 2022
I demand full disclosure of data and methods used for estimating the GDP growth rate for the fiscal 2021-22. The suspiciously high GDP growth estimates of the recent past are often not supported by the correlates and other proxy indicators. This has serious adverse statistical and policy implications for the country as it is trying to secure international development support in the context of LDC graduation.
It is true that the pace of economic activities increased in the first part of FY2022, but there had been a slowdown in the activities since the early second part of the current fiscal year. This implies that there has been an economic rebound, but does not mean that the nature of the economy has gone back to the pre-pandemic state.
The provisional growth figure released by the Bangladesh Bureau of Statistics (BBS) is very close to the growth achieved years before the pandemic. Such growth figures seem unreasonable in the presence of debilitating symptoms of Covid-19 in various economic indicators.
The growth figure released by the BBS is mainly driven by the industry sector. But double-digit growth in the sector needs to be in the context of negative growth in the mining and quarrying sub-sector. It is highly difficult to connect high industry growth with lower growth in the electricity and gas sub-sector.
The economy achieved 6.94% growth last year with investments worth 31.02% of the GDP. The growth in the current fiscal year increased to 7.25% of the GDP. These figures represent a sharp increase in the productivity of capital by reducing the Incremental Capital Output Ratio (ICOR) by 0.10 percentage points in a single year.
The authorities should explain the growth figure by disclosing all of the background data used to compile the GDP figure. The BBS should clarify the basis of the government investment if it uses the data from the national budget or the revised budget.
The figure of the per capita income derived from such grey growth GDP data is also suspicious. A substantial number of people engaged in the non-formal sector and self-employed lost their income due to job loss in the Covid-19 era. Despite some symptoms of recovery, a large number of new poor failed to recover due to the high increase in the price level recently.
The figure of per capita income is illusive for the left behind and pushed behind people of the country. The absence of a household income and expenditure survey for more than six years leaves the country handicapped in terms of understanding the distributional aspects of this incremental GDP.
Dr Debapriya Bhattacharya is Distinguished Fellow, Centre for Policy Dialogue (CPD)