Bangladesh may pivot to tri-quarterly GDP-growth calculation for higher ratings as the current practice of estimation based on data of the first two quarters of a financial year does not reflect real economic situation, officials said.
The Ministry of Finance (MoF) is likely to request Bangladesh Bureau of Statistics (BBS) to do GDP-growth arithmetic with data for the first three quarters, from now on.
Finance officials have discussed that growth estimation "for a full fiscal year with half year's statistics does not carry a realistic picture of the overall economic growth".
They think calculating GDP based on two quarters' data is a "faulty method" and needs a revision now.
The finance officials felt shocked when the BBS on May 27 unveiled provisional data for the fiscal year 2024-25, estimating that gross domestic product will grow by 3.97 per cent to $462 billion from $450 billion in the fiscal year 2023-24.
The growth estimation is the slowest in 34 years, excluding the pandemic year's growth of 3.45 per cent in fiscal year 2019-20, seriously impacted by significantly low agriculture-sector growth and somewhat little growth in services sectors.
"The BBS has taken into consideration the data of first two quarters to estimate economic growth. But it is known to everyone that how instable the country was during the first two quarters," a top finance division official told the FE.
He said during the student-led uprising in last July and August, law and order deteriorated, factories remained closed, transportation disrupted, production both in industry and agriculture hampered for input shortages, and services sector also could not attain growth.
Also, devastating floods in many parts of the country in August last year destroyed agricultural production significantly.
The trend continued for several months and the political stability was yet to be restored, rather, nowadays, the situation is deteriorating again centring upcoming national elections.
Thus, he said, the GDP calculation based on output of those unstable days would not reflect perfect scenario.
"Had third-quarter data been included in the GDP calculation, the scenario might have changed significantly compared to the estimation made on two quarters' statistics," said the official.
Another finance official says they will request the BBS to include third-quarter data in GDP calculation as much as possible in the coming years to provide a realistic picture.
Mohammed Mizanur Rahman, Director-General, BBS, says this provisional GDP estimation is produced before new budget is placed, based on two-quarter data, and it has been a long practice.
However, he says, some third-quarter data, available meantime, have also been incorporated while calculating the provisional GDP for this fiscal year.
"Most third-quarter data were not available when the size of GDP was calculated. If the government gives us more time, we can incorporate all the third-quarter data," he told the FE Friday.
Mr Rahman says from next year the GDP base year will be changed. "We may try to find out ways to incorporate third-quarter data into GDP calculation then."
Meanwhile, global development agencies like the IMF, the World Bank and the ADB have also forecast lower GDP growth for the outgoing fiscal, around in the range of the BBS ratings.
syful-islam@outlook.com
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