Per capita income to jump $233 as FY22 to see 7.25% growth: BBS

The per capita income of Bangladesh is going to increase by $233 to $2,824 this fiscal year, according to the latest provisional estimate of the Bangladesh Bureau of Statistics (BBS).

By shaking off the pandemic fallout, the economy will also grow 7.25% in FY22, according to the estimation revealed by Planning Minister MA Mannan on Tuesday.

The minister said the growth projection of the gross domestic production (GDP) is based on the provisional estimation by the BBS in the first nine months of the fiscal 2021-22 until March.

The government interprets the growth estimation and surge in per capita income as a strong economic rebound from Covid shock, while economists raised questions about the credibility of the data. They are also critical of decline in poverty due to rising per capita income.

While revealing the latest BBS report on various macroeconomic gauges after emerging from the Executive Committee of the National Economic Council (Ecnec) meeting, MA Mannan told journalists that the growth might be more than the estimation at the end of FY22.

In the national budget for the current year, the government set the growth target at 7.2%.

State Minister for Planning Shamsul Alam too placed the economic condition in a good light in terms of growth, as he said, "Our economy is striding ahead by tackling the Covid situation superbly, which is evidenced by the GDP growth."

He noted that the country has not yet been able to return to the pre-pandemic time in terms of growth, "but the economy is on the recovery track".

According to public data, GDP growth was 6.94% in the fiscal 2020-21. The growth rate plummeted to only 3.45% in 2019-20 due to Covid shock.

Shamsul Alam said Bangladesh is at the top among the countries who tackled the coronavirus-led situation effectively. The country ranks fifth out of 121 countries and first in South Asia in international Covid recovery index.

"Bangladesh moved two notches up in the Global Hunger Index and the Human Development Index. The country is also in a good position in terms of export and remittance. Both our exports and imports are growing. The surge in imports is positive news for industrialisation, which ultimately will facilitate the growth," said the state minister.

Citing the Russia-Ukraine conflict will cause some problems to the economy, he said Bangladesh is moving cautiously as inflation revs up globally.

The BBS report says the per capita income will jump by $233 to $2,824, or Tk241,470, at the end of the current fiscal year. However, various studies show around 35%-40% people of the country slipped into poverty during the pandemic. In the 2020-21 fiscal year, the per capita income was $2591, or Tk219,738.

Shamsul Alam said, "We have income inequality as the gap is quite inevitable. There is no alternative to the measurement of per capita income."

"There will always be inequality. Inequality will remain until a certain stage of development. And inequality is not always bad," he said.

Per capita income is not just the individual income of any country. Rather it is estimated by dividing the gross national income, which includes domestic earnings and remittances, by total population.

Growth puzzle

Dr Debapriya Bhattacharya, distinguished fellow at the Centre for Policy Dialogue (CPD), said the growth rate seems "suspiciously high".

"I demand the full disclosure of data and methods of estimating the GDP growth rate for FY22. These suspiciously high GDP growth estimates are not supported by the correlates and other proxy indicators," he told The Business Standard.

The economist said this has serious adverse statistical and policy implications for the country as Bangladesh is trying to secure international development support for LDC graduation.

Zahid Hussain, former lead economist of World Bank Dhaka office, said the provisional growth estimation is close to the growth target set in the national budget.

"If we can do such an accurate projection for GDP, then why don't other projections for revenue, ADP, sales on savings certificates or bank loans match with reality?" questioned Zahid Hussain.

The economist said even many middle-income people have been rushing for government subsidised essential items, while public data suggest their income is on the rise. Meanwhile, the apparel-makers said their income has not increased despite having more exports.

"Then the per capita income has gone to whom? The income also does not match the wage gain," he noted.

Mustafa K Mujeri, former director general of the Bangladesh Institute of Development Studies (BIDS), said inequality is rising as the growth is not inclusive.

"Besides, we are not getting a proper picture of the inequality since we do not have accurate data. During Covid, many people slipped into poverty after facing income cuts and job loss. The per capita income does not always reflect the accurate economic condition of the people," he added.

Agri-growth falls, manufacturing rises

The BBS provisional report says agri-growth in current fiscal year will fall to 2.20% at constant prices. The sector lodged 3.17% growth in the 2020-21 fiscal year and 3.42% growth in the 2019-20 fiscal year.

The bureau says industrial sector growth will increase to 10.44% by counteracting the virus situation. In the 2020-21 and 2019-20 fiscal year, the growth in this sector was 10.29% and 3.61% respectively.

Manufacturing growth will tick up to 12.31% in the current fiscal year from 11.59% in FY21. Growth in this sector was 1.68% in FY19.

In the current fiscal year, large industry will grow 12.87%, small, medium and micro industry 11.71% and cottage industry 11.75%.

Despite having double digit growth in the industrial sector, energy consumption shows a different picture.  Growth in electricity and gas consumption dropped in FY22 compared to the last fiscal. Growth in power consumption has declined to 7.24% from 11.65%, while gas to 0.52% from 1.45%.

The bureau says Bangladesh's services sector will grow 6.31% this year, while the rate was 5.73% in FY21.

The bureau says the size of the country's GDP will increase to $465 billion, or Tk39,765 billion, at the end of the current fiscal year from the previous $416 billion (Tk35,302 billion).

As per BBS, the investment GDP ratio has increased to 31.68% from previous 31.02%.

Despite having a surge in the current fiscal year, private investment in the current fiscal year still falls below the pre-pandemic time. Private sector investment in the current fiscal year has been projected at 24.06%, which was 25.25% in the FY19. The rate was 23.70% in FY21.