Economy hit harder than thought
The economy grew 3.51 per cent in the fiscal year 2019-20, the slowest pace of expansion in three decades, as the pandemic wreaked havoc across the country, according to the final figure of state-run Bangladesh Bureau of Statistics (BBS).
This is nearly two percentage points lower than the growth estimate of the gross domestic product (GDP) the government has until recently maintained.
Economic activities began to recover in 2020-21 following the lifting of the more than two-month-long countrywide shutdown, aided by a steady flow of remittance and a rebound in exports.
The recovery continued until the beginning of the second wave of coronavirus in March 2021.
As such, the BBS has come up with a provisional estimate of 5.47 per cent GDP growth for FY21 based on March-April data.
Economists say the BBS's FY20 GDP estimate was close to reality. However, the provisional estimate of FY21 is likely to decline in the final revision due to recurrent hiccups in economic activities amid lockdowns in place since April.
The BBS FY20 figures are in line with the International Monetary Fund's projection of 3.8 per cent growth for 2020 and the World Bank's 2 per cent for FY20.
The WB, however, estimated the growth to be 3.6 per cent in FY21.
The provisional estimates for FY21 were close to the growth projection of 5.5-6 per cent made by the Asian Development Bank in April.
Economist Zahid Hussain said the GDP growth data was reflective of the state of the economy.
"This has not been the case in recent years. The BBS deserves our kudos for doing this. The planning minister deserves thanks from the bottom of our hearts for letting the data speak."
The downward revision from the preliminary 5.24 per cent growth estimate for FY20 had bridged the gap between the reality experienced by the citizens and the growth reported by the government, said Hussain.
"The new numbers for FY20 tell a consistent story."
The pandemic hit hardest industrial and service activities while agriculture managed to grow at a higher rate than before the pandemic. The rural region was not ravaged by the pandemic last year the way it has been sweeping in the hinterland since March.
Hussain credited the resilience of the rural economy for garnering 3.5 per cent growth in FY20.
Only a handful of economies in the world could keep GDP growth in the positive territory in 2020.
"The pandemic took its economic toll, nevertheless," said Hussain, citing the plummeting growth of industrial and services sectors.
In FY20, industrial sector growth slowed to 3.25 per cent from 12.67 per cent the previous year. The growth rebounded to 6.12 per cent the next fiscal year.
The expansion of the service sector, which accounts for 51 per cent of GDP, declined to 4.16 per cent in FY20, just half of the growth it posted in the previous fiscal year.
The service sector growth edged up to 6.54 per cent in FY21, BBS data showed.
Prof Mustafizur Rahman, a distinguished fellow of the Centre for Policy Dialogue (CPD), said the BBS maintained its credibility with the growth estimate for the last two fiscal years.
The CPD had projected up to 3.5 per cent GDP growth for FY20.
"This is a reflection of the blow on almost all the sectors of the economy in the last quarter of FY20," Rahman said.
With decreased mobility and assembly, private consumption demand hibernated, and the deep uncertainties about the future coupled with increases in un-utilised production capacity brought private investments to a halt.
The estimate for FY21 indicates a recovery despite the destruction caused by the Delta variant of the virus in the last quarter.
Yet, Hussain said, since the BBS estimate was based on the data for the first nine months of the last fiscal year, it did not capture the full impact of the second wave.
Exports grew 15.1 per cent in FY21, rebounding from a 16.9 per cent decline a year ago.
The collection of domestic value-added tax, an indicator of the private consumption expenditure, also grew reasonably well.
Remittances through formal channels were the most buoyant with 36 per cent growth in FY21, compared with 11 per cent a year ago, despite grim forecasts.
CPD's Rahman said there had been a reduction in income and a rise in poverty.
"Unemployment has increased. The disparity has widened. Income distribution has also become more skewed. So, a targeted programme is needed for the new poor."
Investment, a key to productivity growth, remained subdued in FY21.
The economic recovery achieved in FY21 can't be sustained if the community transmission is not drastically reduced from the current level, according to Hussain, also a former lead economist of the World Bank's Dhaka office.
"A much better Covid-19 management will be key to accelerated and inclusive economic recovery in the days to come. Of course, this may not be sufficient, but it certainly is necessary to keep the recovery going."
The government has targeted 7.2 per cent GDP growth in the current fiscal year, way higher than the WB's projection of 5.1 per cent.