A substantial industrial-output fall and dollar crunch slowed Bangladesh's economy with the gross domestic product (GDP) growth having nearly halved to 3.78 per cent in the second quarter of this fiscal compared to previous quarter's.
An analysis on Monday of the country's latest available macroeconomic data showed the services sector was also affected in the Q2 (October-Dec) the financial year (FY) 2023-24.
Agriculture proved a saving grace, however. The farm sector gave a better output to the national economy in the period under review, according to Bangladesh Bureau of Statistics (BBS) data on quarterly economic reckonings.
The country's GDP-growth rates in the Q2 of the last two consecutive fiscals--FY2022 and FY2023-were recorded better than the impoverished state this past quarter.
Economists say a nagging dearth of the US dollar mainly affected the GDP in the Q2 when both import and export slowed down and the inflationary pressure from the supply side affected consumption.
According to the BBS, the GDP growth at constant price was 9.30 per cent in the 2nd quarter of FY2022 and 7.08 per cent in Q2FY2023 in a process of contraction. And the growth plummeted to only 3.78 per cent in Q2 of the current financial year.
In the Q1 this fiscal, the GDP-growth rate was recorded at 6.01 per cent by the state statistical bureau.
Meanwhile, the government has revised down the economic-growth projection for FY2024 to 6.5 per cent from the initial 7.5 per cent in view of the ongoing challenges facing the economy.
Besides, the World Bank (WB) and the Asian Development Bank (ADB) have also forecast down the GDP growth in Bangladesh for the current fiscal amid the slowdown in economic activity.
The WB in its latest Bangladesh Development Update has said the country's GDP will grow at 5.6 per cent. And the other development financier, ADB, has projected the growth for the current FY2024 at 6.1 per cent.
An FE analysis Monday found the growth rate in the industrial sector on a point-to-point basis having dropped to nearly one-third or 3.24 per cent in Q2 (Oct-Dec) of the current FY from that of the corresponding period of last FY2023.
The industrial output in the same period of the previous FY2022 was recorded at a stunning rate of 14.50 per cent.
In lockstep with the industrial sector, the growth in the services sector also nearly halved to 3.06 per cent in the second quarter this fiscal from 6.62 per cent in the same period last FY.
In the Q2 of the previous FY2022, the growth in the services sector was recorded at 7.25 per cent.
Meanwhile, the economic output from the agriculture sector has shown a bright shine as it was recorded at 4.65 per cent in Q2 this fiscal against 4.22 per cent in the corresponding period last FY2023.
In the same period previous FY, the agriculture sector expanded at 2.20 per cent, the BBS statistics showed.
A BBS senior official says publishing quarterly GDP data started in the Q1 this fiscal as per suggestion of the International Monetary Fund (IMF), which has offered Bangladesh $4.7 billion in a loan package packed with economic-reform recommendations.
"It shows the capacity improvement in BBS in presenting quality data," he adds.
"Nevertheless, the QGDP data will be more authentic while we will produce all the data through our own survey without reliance on the administrative data of different ministries," the official told the FE correspondent.
Policy Research Institute (PRI) Executive Director Dr Ahsan H Mansur thinks the US dollar crisis mainly affected Bangladesh's economic growth in the second quarter.
"Although the US dollar crisis is still persisting, but the import was mostly affected in the Q2 this fiscal. That time the export also plunged. So, the overall economic output has slowed down. It was expected," he told the FE.
Dr Mansur predicts that the 3rd quarter this fiscal might also be slower as the situation during this quarter war also same.
The economist suggests that government should work seriously to weather the situation for expanding the GDP at a higher rate in the last quarter (April-June) of the currentFY2024.
Bangladesh's GDP size at current price has stood at Tk 13.098 trillion and at constant price Tk 8.458 trillion, the BBS data showed.
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