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Bangladesh on way to beat the world in GDP growth

Published : 08 Jun 2020 10:38 PM | Updated : 07 Sep 2020 06:08 AM

Bangladesh is going to beat the entire world in GDP (gross domestic product) growth in the current fiscal year, offsetting the impact of coronavirus pandemic, which has pushed economic activities around the globe to a grinding halt.

The International Monetary Fund (IMF) warned that the coronavirus or COVID-19 pandemic might push the global economy into the worst recession since the Great Depression of the 1930s. 

The onslaught of the deadly virus continues across the world which, according to World Health Organization (WHO), has so far infected 6,912,751 people and left 400,469 people dead until Monday.

The Bangladesh Bureau of Statistics (BBS), however, estimates that Bangladesh’s growth this FY will be 5.5 percent, which, according to different estimates, will be the highest not only in South Asia but also in the world, amid the pandemic.

Based on the estimated growth, Finance Minister AHM Mustafa Kamal is going to place the national budget for the 2020-21 FY beginning on July 1, with a target to take the economic growth to 8.2 percent, a little more than 8.15 percent achieved in 2018-19 FY. 

The finance minister had set an 8.2 percent growth target for the current FY.

In the budget for 2020-21 FY, the inflation target is going to be set at 5.4 percent against 5.5 percent in the current budget. The target for per capita income will be $2,326, which is $2,173 in the current budget.

It is learned that in the ongoing corona crisis, there is no one near the shores of Bangladesh other than India to achieve growth. This is because the countries with big economies are likely to suffer from recession in the long run. 

BBS has analysed the data for the first eight months (July-February) of the current FY. The agency’s initial GDP growth estimate was 5.5 percent. As a result, the size of GDP will be Tk 285,121 crore. 

The per capita income is being estimated at 1,968.73 dollars (85.09 taka per dollar) this FY against $1,909 at the end of the 2018-19 FY. In terms of this average per capita income, the total population is estimated at 16.74 crore.

In an interview with Canadian media BNN Bloomberg, Planning Minister Abdul Mannan said that by June 30 this year, the country’s growth is expected to be at least 6 to 7 percent, which will be the highest in the world amid the corona crisis.

The planning minister said, “Clearly, the growth is much lower than the target.We need to understand our priorities. Health is a matter of urgency and more investment on this sector is needed than ever before.”

The planning minister said, “Expenditure will increase a lot in the next budget. Because more money is needed in health, agriculture, roads and other important sectors.”

However, IMF is not as optimistic as the BBS and planning minister because the economy of Bangladesh is very much dependent on garment industry. According to the agency, the GDP growth of Bangladesh in 2020-21 FY could be 3.8 percent.

Bangladesh is currently the world’s second largest garment exporter. At least 60 percent of the country’s export income comes from readymade garments and the garment industry in Bangladesh has been in a crisis because of massive order cancellation in the last few months.

According to the BGMEA, an association of readymade garment owners, buyers in Europe and the United States have cancelled or suspended orders worth about 3.2 billion since in March. Other industries have also been affected by the two-month lockdown.

The world’s largest economies are expected to suffer from the coronavirus in 2020, according to IMF. The agency suggests that India’s growth will be the highest in Asia in 2020-21, ranging from 4.8 percent to 5 percent. The agency predicts that growth in almost all countries will turn negative. 

It estimates minus 5.9 percent growth for the United States, minus 7 percent for Germany, minus 5.2 percent for Japan, minus 6.5 percent for the United Kingdom), minus 6.2 percent for Canada, minus 5.3 percent for Brazil and minus 5.5 percent for Russia. China’s growth could be 1.2 percent.

Major development agencies have also forecast a slowdown in Bangladesh's GDP growth. According to a World Bank report, Bangladesh’s growth could fall to 2 to 3 percent in the current fiscal year. 

The Asian Development Bank (ADB) has previously said that the corona could cause a loss of 0.2 to 0.4 percent of Bangladesh’s GDP. The Economist Intelligence Unit estimates that Bangladesh's growth could fall below 4 percent in the current fiscal year and BBS says Bangladesh’s GDP growth will be 5.5 percent, which no country in the world can achieve.

The World Bank also said that out of the six countries in South Asia, the growth of four countries in the current financial year will be negative. Countries are Afghanistan (minus 5.9 percent to minus 3.8 percent), Maldives (minus 13 percent to minus 8.5 percent), Pakistan (minus 2.2 percent to minus 1.3 percent) and Sri Lanka (minus 3 percent to minus 0.5 percent). On the other hand, growth could be 1.5 percent to 2.8 percent in Nepal and 2.2 percent to 2.9 percent in Bhutan. As such, Bangladesh will achieve the highest growth in the world.

Finance Minister AHM Mustafa Kamal is optimistic about the growth. He said the growth in the current financial year will not be less than 6 percent. 

Referring to the World Bank’s forecast, the finance minister said, “The World Bank’s forecast for Bangladesh’s GDP is not consistent. This is not a good time to say numbers. We have eight months of information in front of us. I don't think the World Bank’s forecast is timely or mature. The effects of coronavirus will reduce our GDP like the rest of the world. However, we will be able to achieve at least 6 percent of GDP this year as well.”

According to the source, the amount of GDP expected by the Ministry of Finance for the next financial year is Tk 31,71,824 crore, which is Tk 26,85,900 crore in the budget of the current FY. Besides, Tk 25,42,482 crore was earned as the final of 2018-19 financial year.