GDP growth vs inflation

The prime minister and other ministers often talk about progress and development. But when we read international journals we get a different picture. Economist Year Book 2014 put GDP growth at 5.7 per cent and the rate of inflation at 7.3 per cent. This puts real growth at (-)1.6 per cent. This means average purchasing power shrank by 1.6 per cent. Take the forecast of the Economist Year book for 2015: GDP growth is shown at 6.3 per cent against inflation of 7.3 per cent. Again the real growth is (-)1%. In true sense, the people are becoming poorer. The country is heavily burdened  by loan that we have to repay one day. At the moment such loan stands at $169 per person.

We are paying debt servicing (interest only) which is about 9.0 per cent of our export earning and amounts to nearly 3.0 per cent of our GDP. It is a grim situation. Recently the central bank declared that it would not issue Tk.5 notes anymore. Perhaps the government will not facilitate small transactions. Not being issued as a bank note, it will have no bearing on reserve held by the central bank. During the same period Malaysia, Indonesia, Philippines and Sri-Lanka managed to keep their inflation lower than growth to achieve real economic progress. In Europe, Switzerland, Sweden, United Kingdom and Germany maintained their economic growth.

F R Chowdhury

10, wakefield Gardens,

Ilford, Essex, IG1 3SJ, UK

fazlu.chowdhury@btinternet.com