Remittance, agri sector drive economy amid corona

Mixed reactions to GDP growth report

Jannatul Islam

14 August, 2020 12:00 AM printer

Remittance, agri sector drive economy amid corona

Bangladesh as achieved impressive growth in the gross domestic product (GDP) in the immediate past fiscal year mostly backed by the agriculture sector and robust remittance inflow, economists said.

The country’s GDP grew by 5.24 per cent in 2019-20 fiscal, according to Bangladesh Bureau of Statistics data.

The international community including Standard Chattered bank projected that Bangladesh’s economy will make a quicker recovery from the Covid-19 crisis than other economies.

Talking to Daily Sun, eminent economists said remittance inflow, agriculture sector and small- businesses are keeping the wheel of the economy rolling.

Bangladesh reported the first death from Covid-19 on March 16 a week after the country confirmed the first case of the virus infection.

Former Bangladesh Bank Governor Atiur Rahman found the GDP growth rate similar to central bank projection in its latest monetary policy statement.

“So I am not surprised to see this growth rate released by the BBS. However, BBS could have been more forthright in explaining that the pinch of COVD-19 crisis started to be felt by the economy from last April when the country went for a sort of full lockdown. Although crop agriculture managed to cope well with the pandemic, the non-crop part of it got a heavy blow,” Prof Atiur Rahman, also the Bangabandhu Chair at Dhaka University, told the Daily Sun.

He also mentioned that the urban informal sector also felt the extreme pressure of the global pandemic since then and the economy lost a quarter substantially despite the fact that the boro crop was harvested well with great support from the administration and other actors.

He also said the remittances performed robustly during the crisis though most macroeconomic indicators were struggling.

To maintain the growth, the eminent economist recommended for keeping a focus on easing all the institutional hurdles to push the money to the real sector, particularly the small and medium enterprises and agriculture.

However, Policy Research Institute Executive Director Ahsan H Mansur raised questions on ‘credibility’ of the report by the state-run body.

“There is doubt about the growth rate. And the health of the economy was not good even before the corona situation. People lost jobs and started to survive through withdrawing savings from banks. In this situation, the growth rate over five per cent can’t be justified with any indicator” Ahsan H Mansur, a former official of International Finance Corporation (IFC), told the Daily Sun.

However, Ahsan mentioned that the positive trend in remittance fueled the impressive growth as the central bank reported 11 per cent growth in the segment in immediate past fiscal despite corona pandemic.  

Bangladesh received $18.20 billion in remittance in the 2019-20 fiscal year, an 11 per cent rise from $16.41 billion in previous fiscal.

Centre for Policy Dialogue distinguished fellow Prof Mustafizur Rahman also said the agriculture sector kept the economy vibrant as service sector and foreign trading maintained faced slowdown last fiscal.

“We found the savings erosions in the last couple of months in large scale as people tried to survive unemployment and salary reduction. The private sector credit growth is not echoed such growth in a pandemic situation,” Prof Mustafizur Rahman said.

Standard Chartered on Wednesday projected that Bangladesh may recover faster from the pandemic-ravaged economic slowdown than many other economies analysing the trends in some key indicators including external balance.