The consumption-GDP ratio has been down by 1.85 percentage points in the outgoing fiscal year (FY 2023-24), official count has shown, with its fallout on the overall economy of the country.
Both private and public consumptions in the national level have dropped, which affected the overall consumption, analysts say, as price hike makes many trim their family menus.
The consumption-GDP (gross domestic product) ratio has been estimated to have dropped to 72.39 per cent in FY2023-24 from 74.24 per cent in the past FY2023, Bangladesh Bureau of Statistics (BBS) data showed.
In the FY2022, the consumption-to-GDP proportion was recorded at 74.78 per cent--the highest in recent past.
Although the impact of the exigency on consumption during the Covid-19 period (FY2020 and in FY2021) was negative, it was found in FY2022. However, it had gone on a decline again in the subsequent two years: FY2023 and FY2024.
Economists say the higher inflationary pressure has affected consumption both in private and public sectors, with its cascading effect on the economy.
According to BBS's latest GDP data, although the public consumption has been decreasing at a lower rate compared to GDP, but the private consumption has fallen significantly. The general government (public) consumption in proportion to GDP in the current FY2024 has been estimated having decreased by 0.06 percentage points to 5.61 per cent from 5.67 per cent in FY2023.
On the other hand, private consumption in terms of GDP has squeezed by 1.80 percentage points to 66.78 per cent in the FY2024 from 68.58 per cent in FY2023.
The inflationary pressure has already hit people over the last one and a half years which forces a cutback on overall consumption in the economy with its adverse impact on production and supply.
Over the last one and a half years the point-to-point inflation has maintained an over 9.0-percent rate, by official count though.
In the past month of May, inflation was 9.89 per cent, BBS data showed.
On a 12-month average during June 2023 and May 2024, the inflation rate was 9.73 per cent. Policy Exchange Bangladesh Chairman Dr Masrur Reaz says inflation has definitely affected national consumption. Besides, yawning income inequality and waning purchasing power of the people have also affected the consumption.
"I think lower import has affected the supply side. You know that the import of raw materials and intermediate goods had already declined. So, local production has decreased and consumption has dropped," Dr Masrur said from his assumption.
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