EDEN BUILDING TO STOCK EXCHANGE

Published: 12:10 AM, 25 October 2020

https://dailyasianage.com/news/245424/praiseworthy-gdp-growth-and-political-wisdom

Praiseworthy GDP growth and political wisdom

M S Siddiqui

In the initial years of its independence from British rule along with Pakistan, Bangladesh struggled to grow fast. However, moving away from Pakistan also gave the country a chance to start afresh on its economic and political identity. Specially, during the past 15 years have witnessed a tremendous turnaround in Bangladesh's standing in the world. It has left Pakistan far behind and extricated itself from the tricky initial years to establish a democratic system. According to the International Monetary Fund's latest World Economic Outlook report, Bangladesh's per capita GDP would rise to $1,887.97 at current prices at the end of this year, up 3.96 per cent from $1,816.04 in 2019. In the last five years, Bangladesh's per capita GDP has grown at a compound annual growth rate of 9.1 per cent. Bangladesh has made long-term investments in various social sectors, such as health, education etc that provided a base for higher growth trajectories, and also helped Bangladesh remain ahead of neighbouring countries in terms of social indicators. Beyond the economics, a big reason for Bangladesh's progressively faster growth rate is that, especially over the past two decades, it improved on several social and political metrics such as health, sanitation, financial inclusion, and women's political representation. Those are for example, achieving almost 100% immunisation, sanitation and drinking water facilities, combating cholera and other infectious diseases, and reducing child and maternal mortality rates are some of the notable achievements. Therefore, Bangladesh's achievement is not a fluke, rather it embarks on some solid macroeconomic and other public policies. Bangladesh is set to post the highest per capita GDP growth rate in South Asia and the fourth-highest in the whole of Asia in 2020 compared to that of last year, comfortably ahead of India and China, data from the IMF showed. No other country in the world is ahead of Bangladesh when it comes to per capita GDP growth in 2020 and most of them would see a contraction because of the pandemic. The best contributing sectors are Agriculture, exports and remittance from expatriates. Bangladesh's rice production rose by 2 million tonnes alone last fiscal year compared to that a

year ago. The country brought home its highest-ever remittance in FY20 and the flow has kept its momentum even during the pandemic. The structure of Bangladesh's economy is such that its GDP is led by the industrial sector, followed by the services sector. Both these sectors create a lot of jobs and are more remunerative than agriculture. The country's per capita GDP growth would be the sixth highest in the world in the current calendar year, as the pandemic has battered most economies in the world in the eight months. Apart from Bangladesh, only two countries in South Asia, namely Bhutan and Nepal, would register positive growth in the per capita GDP, expanding by 2.2 per cent and 3.4 per cent respectively in 2020. Pakistan's per capita GDP was $1,348.68 in 2019. Its figure for 2020 was not available in the IMF's report. In Asia, only Egypt, Timor-Leste and Turkmenistan are ahead of Bangladesh in per capita GDP growth terms, expanding by 17 per cent, 16.25 per cent and 4.5 per cent respectively. China, the world's second-largest economy, would see its per capita GDP growth rise at 3.01 per cent. In Africa, only Malawi's per capita GDP growth would be higher than that of Bangladesh as it would expand by 5.65 per cent. Among the Latin American and Caribbean countries, only Guyana is ahead of Bangladesh: its per capita GDP would increase by 32 per cent this year, the IMF data showed. Other donor agencies are also projecting the achievement of Bangladesh. It's GDP grew 5.2 per cent last fiscal year, which was the highest among 46 countries in Asia, said the Asian Development Bank recently. The ADB has forecasted that Bangladesh's economy would expand by 6.8 per cent in FY21 to post the fourth-highest growth in the region. Three countries would be ahead of Bangladesh this fiscal year: China's economy would grow by 7.8 per cent, India's by 8 per cent and that of the Maldives by 10 per cent. Pakistan's economy would expand by 2 per cent. The World Bank said Bangladesh's economic growth would decline to 1.6 per cent while India's economy would post a negative growth of 9.6 per cent in the current fiscal year. Pakistan's GDP shrank by 1.5 per cent in FY20 and is set to grow by 0.5 per cent in the current fiscal year. The IMF lowered Bangladesh's GDP growth forecast for FY21 to 4.4 per cent, down from the 5.7 per cent it projected earlier. The central message of the IMF report highlights the fact that the global economy is set for a "long and difficult ascent to pre-pandemic levels of activity remains prone to setbacks". While national policies need to be favourable for "stronger, equitable, and sustainable growth"; greater international collaboration is also critical at this juncture. Bangladesh should not feel too self-satisfied with the latest projection by the IMF. Bangladesh's advancement should be the centre of our attention. Despite significant progress in GDP growth and increase in per capita national income, Bangladesh is facing challenges in quantity and quality of government expenditure, revenue generation and some other fields of macroeconomic. Revenue generation, compared to the size of the GDP in Bangladesh, is lowest among not only the South Asian countries but also the rest of the world. The lowest revenue cannot not support a significant expenditure. The government also needs to ensure quality expenditure to develop infrastructure besides easing the cost of doing business. The GDP and its growth and per capita GDP are not the main determinants of sustainable overall development, although these indicators are given great importance in assessing the economic development of a country. In addition to GDP, the overall development of any country should be measured through several indicators such as affordability, inequality, deprivation, and the well-being of its citizens. Without complete information on these metrics, there is no scope to say that the economy of Bangladesh is ahead of India based on $11 annual per capita income.

There is absolutely no room for self-satisfaction in the face of so many problems in the macro-economy. The economy was slowed during the pre-Covid period. The export growth was declining, investment, credit was in declining trend, and remittance was slowing down. The major exporting sector of RMG was losing competitiveness and the sector was demanding more subsidies to remain competitive in the global market. Bangladesh need reform in fiscal sector and facilitate trade to become competitive in the global market. Bangladesh is performing better despite Covid-19 due to strong self-immune system of citizen and also timely withdrawal of shut down or holidays with the strong political will and wisdom of the highest leadership. The writer is a legal economist. Email: mssiddiqui2035@gmail.com