The United Nations, in a hard-hitting report, has revealed that on a calendar year basis, Bangladesh's economic growth fell dramatically to just 0.5% in 2020 from 8.4% in 2019.
"Even Bangladesh, the fastest growing economy in the region, has seen economic growth to fall, from 8.4% in 2019 to 0.5% in 2020, although this was cushioned somewhat by a recovery in trade and remittances in the second half of the year," the report highlighted.
The UN Department of Economic and Social Affairs (UNDESA) released the report titled "World Economic Situation and Prospects 2021" on 25 January.
The report also presented economic growth figures in terms of fiscal year basis where it mentioned Bangladesh's economic growth is estimated to have decelerated to 4.3% in the fiscal year of 2019-20, and the country's growth is projected to grow at 5.1% in FY21 and further 7.6% in FY22.
Along with the national estimate, global lenders such as the World Bank, the International Monetary Fund (IMF), and the Asian Development Bank (ADB) have announced economic growth figures for Bangladesh on the basis of a fiscal year, which is from 1 July to 30 June of the next year.
The Bangladesh government announced achieving 5.2% growth in the fiscal year of 2019-20, the World Bank estimated only 2.0%, the IMF said 3.8% where the ADB and The Economist Intelligence Unit relied on government estimation.
All these growth figures for the country were considered from 1 July 2019 to 30 June 2020, meaning that only three months of the pandemic were taken into consideration in the growth figures.
The economy of Bangladesh was fully open till 25 March in around the first three months of 2020, and afterwards throughout the year, the economy felt the heat of the pandemic in every sector.
The United Nations has also announced fiscal year growth figures for the country and it estimated the figures on a calendar year basis, starting from January to December 2020.
Dr Zahid Hussain, former lead economist of the World Bank's Dhaka office, told The Business Standard that economic activities had remained completely closed between last week of March and June last year. If one-third of a country's economy activities are shut only for just a month, there will be no growth that year. Under this consideration, the 0.5% growth may sound very low, but it is not unrealistic at all.
Activities in the service sector are still running on a limited scale. Growth in export earnings is also negative. In this situation, there is less chance to expect more growth last year, he added.
Dr Zahid said total production in almost all the neighbouring countries had declined last year compared to that in the preceding year. India's economic growth fell 9.6%.
The government projected 5.24% economic growth in the last three months of the last fiscal year without taking Covid impacts into consideration.
Even though seven more months have gone past after the end of fiscal 2019-20, the Bangladesh Bureau of Statistics has not been able to publish the actual growth data. There is also some kind of confusion as the real growth picture is not available, Dr Zahid pointed out.
Regarding the UNESDA report, he said the agency did not publish the methodology in the growth forecast. It did not say anything about what kind of growth can take place in a sector. Considering all these factors, the basis of the report is a bit weak, he added.
Fahmida Khatun, executive director at the Centre for Policy Dialogue (CPD), said production was almost shut down for more than two months due to the Covid-led shutdown. Although economic activities resumed after the shutdown was lifted, no sector, except for a handful, has returned to their previous levels yet.
All economic indicators, including private sector credit, investment, manufacturing, exports, and imports of capital machinery and raw materials are now failing. In this situation, it is normal for the economic growth to decrease.
Before the Covid-19 made inroads in the country, except remittances and exports were underperforming. After the pandemic hit, everyone is sceptical about how much economic growth the country would achieve.
Fahmida suggested that the real picture of growth in the last fiscal year be released soon to end this confusion.
South Asia, the former growth champion
The pandemic severely impacted most economies in South Asia, its economic growth dropped from 3.1% in 2019 to -8.6% in 2020 and expected to rebound in next year at 6.9% growth.
India's economy is estimated to contract by 9.6% in 2020 from 4.7% in 2019, as lockdowns and other containment efforts to control Covid-19 slashed domestic consumption without halting the spread of the disease, and the growth is expected to recover and grow at 7.3% in 2021.
Meanwhile, economic growth in Pakistan has fallen from 0.3% in 2019 to -2.7% in 2020.
"South Asian countries that are relatively more exposed to global economic conditions, such as Bangladesh and Maldives with their high share of foreign trade and Nepal with its dependence on tourism and remittances, will enjoy a stronger rebound, of about 10% growth in 2021," highlighted the report.
The report said that South Asian countries will need to diversify their economies to improve resilience and generate more local added value.
The global economy shrank by 4.3% in 2020, over two and half times more than during the global financial crisis of 2009. The modest recovery of 4.7% expected in 2021 would barely offset the losses of 2020.
The UN warned that the devastating socio-economic impact of the Covid-19 pandemic will be felt for years to come unless smart investments in economic, societal and climate resilience ensure a robust and sustainable recovery of the global economy.
"We are facing the worst health and economic crisis in 90 years. As we mourn the growing death toll, we must remember that the choices we make now will determine our collective future," said UN Secretary General António Guterres, who addressed the Davos Agenda on 25th January.
"Let us invest in an inclusive and sustainable future driven by smart policies, impactful investments, and a strong and effective multilateral system that places people at the heart of all socio-economic efforts."
The global lenders see Bangladesh's economic growth is expected to recover and grow.
The UN report highlighted the country's growth is projected to grow at 5.1% in the fiscal year of 2020-21 and further 7.6% in fiscal year 2021-22 where the Economist Intelligence Unit expected its real GDP to expand by 6.2% in fiscal year 2020-21, faster than 5.2% in 2019-20.
Earlier this month, the World Bank kept its projection of the country's economic growth unchanged at only 1.6% for the fiscal year 2020-21 and forecasted to grow at 3.4% in the next fiscal year.
In September last year, the ADB predicted that Bangladesh would have a strong economic recovery in the current fiscal year with 6.8% GDP growth. A month later, the IMF announced its projection of 4.4% economic growth of Bangladesh for the fiscal year of 2020-21 and to grow at 7.9% in the next fiscal year.