Country’s economy remains strong despite shocks

Hasibul Aman

28th December, 2019 10:40:24 printer

Country’s economy remains strong despite shocks

The country witnessed a mixed economic performance in the outgoing calendar year 2019 with many success stories partly dented by some failures.

The success stories include impressive GDP growth, per-capita income, macroeconomic stability, fall in poverty rate, better exports, remittance and most importantly, policy continuation with the continuation of the government.

The failure includes the inability to contain onion price, ensuring better price for raw hides, growing income inequality, rising non-performing loans in the banking sector, some project scams.

Growth in the country’s economic output hit a record high at 8.15 per cent with $1909 per-capita income in the 2018-19 fiscal year, up from 7.86 per cent growth and $1,751 per-capita income a year earlier.

The poverty rate declined to 20.5 per cent in 2019, which was 21.8 per cent one year ago, according to the latest data of the Bangladesh Bureau of Statistics (BBS).

Similarly, the extreme poverty level came down to 10.5 per cent in 2019 from 11.3 per cent in 2018.

Higher GDP growth and an increase in per-capita income mainly contributed to the fall in poverty level, Planning Minister MA Mannan argued.

The impressive GDP growth was largely supported by growth in agriculture, small industry, construction, transport and communications, wholesale and retail business, real estate, education and health sectors increased, BBS said.

Meanwhile, the economy has gone through an economic transformation as traditional agricultural sector’s contribution to GDP fell while greater contribution came from the industrial sector.

The share of the industrial sector increased to 35 per cent from 33.66 per cent in FY19 while agriculture’s share in GDP slipped to 13.65 per cent from 14.23 per cent a year earlier and that of service sector fell to 51.35 per cent from 52.11 per cent.

In the last fiscal year, the investment-GDP ratio slightly rose to 31.57 per cent from 31.23 per cent in FY18.

Private investment to GDP ratio also increased to 23.54 per cent while the public investment ratio to GDP stood at 8.03 per cent.

Now, life expectancy rate in Bangladesh rose to 72.3 years with women’s life expectancy rate increasing to 73.8 per cent.

Export earnings in FY19 grew by 10.55 per cent year-on-year to $40.53 billion riding on a high volume of garment shipment in a favourable external business environment.

The earnings were 3.94 per cent higher than the annual target of $39 billion in 2018-19. In 2017-18, Bangladesh exported goods worth $36.66 billion.

Garment export earnings, which accounted for over 84 per cent of the national exports, amounted to $34.13 billion, registering an 11.49 per cent year-on-year growth.

Remittances inflow grew by 9.65 per cent to a record US$16.42 billion in the 2018-19 fiscal year (FY), up from $14.98 billion in FY 2017-18.

Strengthening supervision and monitoring by the central bank to check illegal ‘hundi’ transaction contributed to the increased flow of remittances alongside the weakening of taka against the greenback.

Despite finance minister’s repeated assurance to lower non-performing loans (NPLs), the volume of NPL in banking sector jumped by nearly 24 per cent or Tk 223.77 billion to Tk 1,162.88 billion as of September 30 last, from Tk 939.11 billion on December 31, 2018.

In 2019, scams in expenditure of some important development projects like Rooppur nuclear power plant drew huge flaks, which overshadowed the government’s success in development.

Putting a ban on onion exports by India coupled with market oversight failure of the commerce ministry shoot up onion price to as high as Tk 300 per kg, putting huge pressure on the public wallet.

Despite high growth, growing social inequality is also a major concern for the economy as wealth is being amassed among a handful of people.