After the previous Awami League government inflated the figures of Gross Domestic Product (GDP) growth, the interim government presented the real picture of GDP. It shows that the economic growth of Bangladesh is lower than any time in the past. According to Bangladesh Bureau of Statistics (BBS) data, the economic growth of Bangladesh in the first quarter (July-September) of 2024-25 fiscal year was 1.81 percent. These figures indicate the fragile state of the country's economic recovery. Analyzing the data, this is the slowest growth since the 1980s, excluding the lockdown period during the Corona period. During the period of October-December of the financial year 2020-21 during the corona pandemic, the growth was further reduced. Then the economic growth rate dropped to 0.93 percent.
According to the data of the Bureau of Statistics, the GDP growth in the fiscal year 2019-20 during the Corona period was 3.51 percent. Although the then Awami League government claimed for more than a year – the growth in that financial year was 5.24 percent.
Growth was negative only in the fiscal year 1981-82
According to Economic Survey data, GDP growth was negative only in the fiscal year 1981-82. At that time the growth was minus 1.6 percent. Although the continuation of economic growth since independence can be observed, doubts arise among economists about the data of GDP growth during the previous Awami League government. Almost every year before and after the budget announcement, economists have expressed doubts about GDP growth.
In the past, GDP data was inflated
Meanwhile, due to the July-August movement of 2024, a lot of deadlock was created in the economy. It is believed that there has been a major impact on the total domestic production due to the disruption of industrial production in the situation of political change around the movement. Analysts say the first quarter of the fiscal year also saw challenges such as floods and labor unrest. Besides, during the last period of the Awami League government, billions of rupees were being laundered from banks. Dollar crisis disrupts imports. Bank transactions were closed for several days. After the formation of the interim government, everything started gradually, but the economy continued to stagnate for the first few months. There was volatility in the garment sector till October last year. Still some banks are not able to refund the customer's money.
Economists say that the economy was at a standstill for these three months from last July to September, and growth has been calculated by comparing it with the inflated data of the previous government. A comparison with the data for the first quarter (July-September) of the 2023-24 financial year shows that the economy has bottomed out. At this time last year, GDP growth was on paper at 6.04 percent.
Economists say that the country's economy has been taken to the bottom during the Awami League period, although the paper shows something different.
In this context, the head of the white paper preparation committee of the interim government and the honorary fellow of the Center for Policy Dialogue (CPD). Debapriya Bhattacharya said, Awami League lied about GDP growth.
He said, 'The figures of GDP growth shown by the previous Awami League government are not correct. According to him, the growth calculation during the previous government was false.
Professor of Economics Department of Dhaka University and Executive Director of Research Institute Sanem. Salim Raihan said, 'In the first quarter of the financial year, the economic activities were stagnant due to the political situation in the country. It was easily predictable that there would be a low rate of growth. However, Bangladesh Bureau of Statistics is now able to provide accurate data in an environment free from political pressure. That's why the growth is less. What is to be seen now is how much momentum the economic activity gets in the current quarter and in the coming days.'
The statistics bureau's report shows a summary of the first quarter of GDP in the 2024-25 fiscal year — growth slowed sharply in that quarter, but the trend began in January last year. Since then, GDP growth has consistently declined for three consecutive quarters. The growth in the third quarter of the last financial year was 5.42 percent. It was 4.78 percent in the second quarter and 3.91 percent in the third quarter.
A GDP analysis of the three largest sectors of the economy showed that agricultural output grew by just 16.16 percent in the first quarter, down from 35.35 percent in the previous year.
The growth of the industrial sector, the driving force of Bangladesh's economy, could not inspire hope. During July-September of the current financial year, the GDP growth of the industrial sector has decreased at a higher rate than the same quarter of the previous financial year. It has come down from 8.22 percent growth to 2.13 percent. The situation is almost the same in the service sector. GDP growth from 5.07 percent to 1.54 percent.
In this context, Professor Mostafizur Rahman, Honorary Fellow of Center for Policy Dialogue (CPD), a private research institute, said, 'During the period of Awami League, the country's economy was at a standstill. There was stagnation in investment. But then the GDP data was shown in a much inflated form. During the first quarter of this fiscal year, during the student agitation, agricultural production was normal, but there was stagnation in the industrial and service sectors. Besides, there were challenges like floods and labor unrest in the garment sector. It had an impact on overall investment and employment. And compared to the previous year's first quarter, the growth is very low. But now the uncertainty has reduced a lot. We expect the growth to return to a positive trend in the next quarter.'
Earlier last December, the International Monetary Fund (IMF) also said that Bangladesh's economic activity has slowed significantly and as a result, growth will drop to 3.8 percent by the end of the current fiscal year. However, the agency believes that the economy will pick up in the next financial year, i.e. 2025-26, and the economic growth will increase to 6.7 percent.
According to BBS data, domestic value addition at constant prices during July-September was Rs 8 lakh 4942 crore, which is the lowest in the last 4 quarters. Among the 11 sub-sectors, the highest growth of 12.65 percent was in the mineral and stone extraction sector. Negative growth was in the financial and insurance sectors.
Businessmen, however, say that to overcome the current situation, it is necessary to ensure political stability, adopt investment-friendly policies, control inflation and take effective steps to restore confidence in the banking sector. Along with this, there is a need to strengthen the ongoing reform program to ensure long-term economic stability. If these measures are properly implemented, the economy will recover its momentum.
Dhaka Chamber of Commerce and Industry (DCCI) President Taskin Ahmed told the Bangla Tribune, “The GDP growth rate in the first quarter has dropped to 1.81 percent which is worrying for the country's economy.” He thinks that the slow pace of investment in the private sector is one of the reasons. In particular, the crisis in the industrial sector has had the greatest impact in this regard, which has slowed down production activities.
The defaulted loans were also hidden
Meanwhile, although the fall in foreign exchange reserves has been stopped, economic activity is not accelerating. No new investment. On the contrary, most of the entrepreneurs are in trouble due to the increased cost. They say that the plight of this economy, which has been disrupted due to money laundering, corruption, misrule and looting of the previous government, is not going away.
Some of the weakened banks are still not able to pay according to the customer's demand. Officials of the banks say that the loan money taken from the bank during the previous government is not coming back. This has increased defaulted loans.
Bangladesh Bank Executive Director and Spokesperson Husnay Ara Shikha said that earlier the information about defaulted loans was hidden. Now trying to bring out all the hidden information. It is being said that defaulted loans are four lakh crore rupees or more. However, if the full information comes out, the amount of defaulted loans can be released even 6 lakh crores.
At a press conference on Tuesday (January 7), Husnay Ara Shikha said, 'At the moment, we have no concern about reducing defaulted loans. After the investigation, the necessary steps to reduce defaults will be known.'
He said, '(We) are trying to follow international rules regarding player loans. This can also be a reason for the increase in defaulted loans. But whatever the information, now we are revealing everything, which was previously hidden.'
Before this, the governor of Bangladesh Bank. Ahsan H Mansoor said in an event, 'We are checking the health of the country's financial sector. In future, defaulted loans will reach 25 to 30 percent, which is now 12 and a half percent. In the next month it will be 15 percent, then 17 percent and gradually it can reach 30 percent.' He mentioned, 'This default has already happened. Now it will come under the calculation.'
A picture of economic growth in the eighties
Meanwhile, according to Economic Survey data, economic growth was 1 percent in the fiscal year 1979-80. Economic growth in 1982-83 was 1.1 percent. In the next two financial years i.e. 1983-84 and 1984-85 the GDP growth was 1.4 percent. In 1985-86 the GDP growth was 1.6 percent. In addition, the growth in 1976-77 and 1978-79 financial years was 1.7 percent. In 1974-75 the growth was 2 percent. In the financial year 1987-88, the growth was 2.2 percent. However, the country's first budget was given in the fiscal year 1972-73. Then in 1974, the per capita GDP growth of the country was 7.7 percent, in contrast to 9.6 percent. However, according to Economic Survey data, the GDP growth in 1973-74 was 9.5 percent. Again the growth in 1975-76 fiscal year was 9.7 percent. Similarly in 1977-78 the GDP growth was 7.9 percent.
Growth from 2005-06 to 2014-15
According to Bangladesh Bureau of Statistics data, the growth rate in 2005-06 was 6.67 percent. It increased to 7.06 percent in the fiscal year 2006-07 during the caretaker government. In fiscal year 2007-08 it decreased to 6.01 percent, in fiscal year 2008-09 it further decreased to 5.05 percent, in fiscal year 2009-10 it was 5.57 percent, in fiscal year 2010-11 it increased to 6.46 percent, in fiscal year 2011-12 it was 6.52 percent. percent, decreased by 6.01 percent in FY 2012-13 and 6.01 percent in FY 2013-14. It stands at 06 percent. The GDP growth rate in 2014-15 is 6.55 percent.
