GDP growth rate of Bangladesh came into criticism once again by another economic research organization SANEM, South Asian Network on Economic Modeling, a non-profit research organisation. The research organisation’s observation came around two weeks after the Centre for Policy Dialogue, who also questioned the current year’s growth estimate of 8.13 percent, citing incinsistency in various indicators of the economy.
In their quarterly Review of Bangladesh Economy, SANEM questioned Bangladesh’s recent GDP growth data claiming that the growth rate data as ‘Puzzling’ and ‘Inconsistent’ with various indicators of the economy.
Major concern came over the two main drivers of the economic growth – export and remittances. SANEM pointed out that though the government data showed a surge in private consumption in the last two fiscal years, export and remittance growth had been slow during the period. SANEM Executive Director Selim Raihan said it cannot be explained why private consumption saw a sharp rise in the last few years.
SANEM also raised concerns over the current problems in the banking sector, which also shown poor performances in recent times and came under criticism from different blocks. SANEM explained that high non-performing loans [NPLs], institutional weakness and political patronage characterise the banking sector and major reasons of the under-performances in recent times. It also questioned recent decisions by government on changes in the rules on NPLs and concessions to defaulters claiming such moves would further harm the sector.
Growth in private sector consumption also came into their radar. Citing Bangladesh Bureau of Statistics data, SANEM analyzed that the growth in private consumption, which was estimated at 11.41 percent in fiscal 2017-18 compared to 7.43 percent in the previous year, is a big concern since there is low growth in export and remittance. The second concern is that the government data shows high growth in the manufacturing sector though the growth in export and private investment has been sluggish.
In the review, SANEM mentioned that domestic demand can become a driver of growth with sizeable improvement in per capita income. But in that case, overall growth rate may fall claiming domestic demand cannot be a driver of growth in a low-income country like Bangladesh.
SANEM questioned the high growth rate of 13.4 percent in the manufacturing sector in fiscal 2017-18, saying the export growth was 5.81 percent in that year. Private investment growth was also slow during the period.
The organisation said the business environment has not improved to such an extent that could support the data on high growth in the manufacturing sector.
SANEM also criticised on the poverty reduction and unemployment saying the pace of poverty reduction is much slower than that of GDP growth rates, so as the employment generation. Hence, the quality of growth is came under their scrutiny.
The organisation pointed out falling tax-GDP ratio and sluggish growth in revenue collection in recent years.
SANEM asked for reforms in tax system, banking sector and trade policy.
Source: Daily Star, May 10, 2019
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