GDP growth data not credible, says CPD

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According to the provisional data of Bangladesh Bureau of Statistic (BBS), Bangladesh posted 5.24% GDP growth within the last 2019-20 fiscal year

Raising question about the credibility of the provisional 5.24% GDP growth within the last fiscal year, the Centre for Policy Dialogue (CPD) yesterday said the calculation of the economic growth hadn't taken the impacts of the Covid-19 pandemic into consideration.

In addition, it said the gross domestic product (GDP) computation was not predicated on credible data.

According to the provisional data of Bangladesh Bureau of Statistic (BBS), Bangladesh posted 5.24% GDP growth in the last 2019-20 fiscal year.

The think-tank made the observations in a virtual media briefing, titled, “Provisional Estimates of GDP Growth in FY2020 CPD’s Reaction” on Sunday.

“You will find a question about the credibility of figures found in the estimation of provisional GDP growth as the majority of the indicators such as for example investment, export, and private credit growth were in the negative growth trajectories,” said Fahmida Khatun, Executive Director of CPD.   

She said the impacts of  Covid had not been taken into account in GDP estimation.

Why questions arise on GDP growth

Industry sector growth rate contributed significantly to the fall in GDP growth, which registered 6.48% growth in FY20 against 12.67% in FY19.

In the manufacturing sector, large and medium scale businesses suffered badly and its own growth came down to 5.47% in FY20, that was 14.84% in FY19.  

Agriculture sector recorded 2.2% growth, that was 4.1% in the previous fiscal year, while service sector growth came right down to 5.32% against 6.78% in the same period, the think-tank explains.

On the other hand, export declined by 51.2% during Apr-Jun of FY2020, while only 76.8% of original ADP was implemented in FY2020.

In FY20, import of capital machinery declined by 33.8%,  net FDI declined by 42.5% and revenue earnings dropped by 34.6%. 

“So, where did the growth result from,” Fahmida questioned.

“The weaknesses in GDP estimation and dearth of real-time data were exposed in the GDP estimation in the time of pandemic when you will find a heightened dependence on credible real time data.  Indeed, over fifty percent of the provisional GDP estimates are not based on credible real time data,” noted Towfiqul Islam Khan, Senior Research Fellow at CPD, in his keynote presentation.

The provisional estimates of GDP hadn't captured the impacts of COVID-19 pandemic in the neighborhood economy for FY2020, he added.

The provisional estimates of GDP indicated that Bangladesh economy had already been losing its steam even prior to the Covid-19, said Islam.

GDP growth turns a political figure

“The GDP growth converted into a political number and it created fascination among policy makers along with politicians. They make utilization of it politically as an indicator of success,” said Fahmida.   

There have been no benefits in exaggeration of GDP growth and it would not help to formulate effective policy making, she added.

If GDP growth didn't reduce poverty rate, generate employment and remove inequality, it was not meaningful. Growth ought to be inclusive, she noted.

Unreliable data harmful to policy making  

“If the authority concerned will not provide real data, it'll give a wrong signal about poverty, employment and investment to policymakers,” said Mostafizur Rahman, distinguished fellow at CPD.

Accurate data helped the federal government to take the proper policies, he said.

“Because of this we are urging the federal government to create a Statistic Commission to make sure reliability of data.”

GDP does not reflect in true to life

“If the federal government estimation of 5.24% GDP growth and other data are accurate, poverty and unemployment aren't supposed to increase, ” said Khondaker Golam Moazzem, research director at CPD.  

If the private sector investment had increased within the last fiscal year, why did the government offer packages to stimulate investment, he questioned.

As per the government data, private investment to GDP increased to 23.63% in FY2020 from 23.54% in FY2019, which required a nominal growth of 10.4%.  Public investment to GDP risen to 8.12% in FY2020 from 8.03% in FY2019

“A growth in private investment is indeed unexpected when the entrepreneurs have already been struggling to keep carefully the existing production capacity fully operational. Curiously, even throughout a year of pandemic, private investment registered a notable growth,” said the CPD.  

“If the federal government figure is accurate, then we need to say productivity of capital has decreased substantially in the united states,” said Mostafizur.

Expressing his wonder, Mostafiz said with 32% investment to GDP ratio, last year Bangladesh achieved over 8% GDP growth, which came down to 5.24% with the same investment ratio in FY20. 
Source: https://www.dhakatribune.com

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