7pc growth first time in 9 years

Bangladesh's gross domestic product (GDP) growth would exceed the 7 percent mark in the current fiscal year, according to provisional data.

Riding on the growth in the industry and service sectors, especially an increase in public-sector wage, the country is going to achieve an above-7-percent GDP growth for the first time in nine years.

According to provisional data of the Bangladesh Bureau of Statistics (BBS) for fiscal year 2015-16, the GDP would grow to 7.05 percent, which was 6.55 percent in the last fiscal year.

In 2006-07 fiscal year, the GDP growth was 7.06 percent, and according to BBS officials, the higher growth in 2006-07 fiscal year was due to a change in base year.

Briefing reporters yesterday after a meeting of the National Economic Council (NEC), Planning Minister AHM Mustafa Kamal said Bangladesh's GDP growth had long been hovering between 6 and 7 percent, and through attaining the 7.05 percent growth the country would be able to overcome the “trap”.

He also said the country's economy had been progressing day by day with the contribution of all, including workers and farmers.

However, several economists expressed doubt over the provisional data and said there was uncertainty whether the growth target could be achieved.

Former caretaker government adviser ABM Mirza Azizul Islam said, “I do not trust this number.”

He said the indirect indicators of the economy do not support the data. Since tax collection reflects the condition of an economy, the revenue collection growth is slow in this fiscal. He said production has a relation with consumption.

There is a declining trend in remittance inflow. As a result, the remittance data does not show a rise in consumption, Azizul Islam said, adding that the growth of industrial raw material and capital machinery import is also slower than the July to February period of the last fiscal year. He said the private sector credit growth also increased slightly.

Only the export sector is showing good growth. He said he does not see the signs of the GDP growing half a percentage point this year.

Zaid Bakht, former research director of Bangladesh Institute of Development Studies (BIDS), said there remains uncertainty as to whether the growth target could be achieved.

A major part of the growth depends on the performance of export, he added.

Zahid Hussain, lead economist at the World Bank's Dhaka office, said the increase in growth came largely from the service sector, especially from public administration, education and health.

The increase in public sector wages has played a big role in taking overall growth to over 7 percent. Besides, increase in growth in large-scale manufacturing, construction and transport sectors also helped.

“The key question is can we sustain the 7 percent growth rate in the near and medium term. Obviously, public sector wages cannot be increased in such magnitude every year,” the WB economist said.

In order to sustain the growth rate, expansion in the economy's production capacity and factor productivity would be needed. And to do that, new investments are required, he said.

Besides, the latest BBS data show that the private investment to GDP ratio has declined from 22.07 percent in fiscal year 2015 to 21.78 percent in fiscal year 2016, he added.

“Clearly the constraints on private investments have not eased. Unless we address the infrastructure and regulatory constraints on private investments, sustaining 7 percent growth will be very difficult,” Zahid observed.

The BBS provisional data show that the agriculture sector would witness a 2.6 percent growth in the current year, which was 3.33 percent in the previous year.

The industrial sector would see a 10.10 percent growth against 9.67 percent in the previous fiscal year, and the services sector a 6.70 percent growth in the current year against 5.8 percent in the previous year.