Even though more than six months have passed in the current fiscal year, the actual growth rate of the gross domestic product (GDP) of last year is yet to be ascertained. It is impossible to estimate the growth of the current financial year without the actual data of the previous year.
If last year's actual GDP growth surpasses or falls short of the Bangladesh Bureau of Statistics' (BBS) provisional estimates of 5.24%, the same amount of change will be in the growth this year. In this situation, the primary task of the BBS is to publish the final accounts of the last financial year.
It is difficult to estimate the actual growth until the fiscal year comes to an end. I don't want to create controversy by saying a number. However, by reviewing the nature of the macroeconomic dynamics, one can get an idea about this.
In the current financial year, the main indicators of the economy are showing signs of recovery from the coronavirus shocks. But it will take a long time for the economy to return to normal.
During the preparation of the budget for the current fiscal year, the GDP growth target was set at 8.20% based on several assumptions and hypotheses. At the end of six months, many of these assumptions have proved ineffective.
Even though a 22% growth in export earnings has been targeted for this year, the sector has seen a negative growth in the first six months.
Along with the recovery of the economy, the revenue growth is targeted to increase by about 50% from that of the previous year. However, the average growth in import duty, value added tax and income tax is only 5%.
Against the target of a 14% growth in credit flow to the private sector, the achievement is only 8%. Meanwhile, import growth remains in the negative, while the target is to achieve a double-digit growth in the sector.
Overall, the current state of all macroeconomic indicators for the current financial year is worse than the budgetary assumption.
After reviewing all these indicators, it is easy to say that achieving the target of 8.20% GDP growth set in the national budget or 7.40% growth target set in the Eighth Five-Year Plan will not be possible this year.
But, since economic activities have begun and production in mills is also on the rise, the growth rate is sure to be over 2% by the end of the year.
We need to focus on increasing private sector investment to revive the economy. The smooth implementation of the government's ongoing loan and incentive packages must also be ensured.
Moreover, private investment will not grow as expected if the initiatives taken in the areas of logistics, trade facilitation, one-stop service and ease of doing business are not implemented quickly.
In order to ensure the desired development of the economy, importance must be given to the acquisition of internal resources. To this end, the government should be proactive in preventing trade mispricing, digitisation of VAT and other policy reforms.
Professor Mustafizur Rahman spoke to jahidul Islam over the phone.
Professor Mustafizur Rahman is a Distinguished Fellow of the Centre for Policy Dialogue