The GDP share of wholesale-retail trade has remained almost static in the outgoing fiscal year, which experts cite as an impact of inflationary pressure that forces millions to squeeze consumption.
The sector, which includes wholesale, retail and vehicle servicing, comprises 14.43 per cent of the GDP (current market price) in FY24, according to the Economic Review 2024.
The GDP share was 14.42 per cent in FY23, showed the review made by finance ministry.
The growth of the sub-sector in terms of GDP has also declined to a three-year low at 12.41 per cent in FY24.
The review said the GDP size was likely to reach Tk 50.48 trillion in FY24. Of them, the wholesale-retail subsector's share would be Tk 7.28 trillion.
According to Policy Exchange of Bangladesh chairman Dr Masrur Reaz, high inflation normally leads to high prices of goods, which keep the value of wholesale and retail trade increasing.
He said the share to GDP might have been static but the absolute value of the sector have increased even though the demand was sluggish for products, meaning unit prices might have gone up.
High inflation may cause shrinking consumption as people buy fewer goods overall, which can limit the growth of the wholesale and retail trade sector.
Dr Reaz also pointed out that investment in the sector in question might be steady without significant rises, leading to stable output and contributions to GDP.
According to the finance ministry, private-sector investment in terms of GDP has declined to 23.51 per cent in FY24 from 24.18 per cent in FY23.
As imports have declined in FY24, Dr Reaz said, it would directly affect the wholesale trade.
RAPID Bangladesh chairman Prof Dr Mohammad Abdur Razzaque said consumers might substitute for goods that have less inflationary pressure or switch to domestic alternatives due to shrinking imports, maintaining the sector's overall value.
Imports of both foods and non-food items declined in the outgoing financial year by minimum 15 per cent which indicates a lower consumption, according to him.
Dr Razzaque said point-to-point inflation has remained at 9.5 to 9.9 per cent for the last one year as per government statistics.
On the other hand, the national wage rate in May 2024 was 7.88 per cent, wage growth remained below inflation for more than the past two years, depicting the consumption capacity of millions of people, he added.
When asked, Dr Reaz said most of the e-commerce businesses have come under formal trading. So, digital services by them might have already been counted. But f-commerce (Facebook-based business) entities are still out of the mainstream trade, according to him.
Dr Reaz said, "I think the trade volume of f-commerce in the country is still very minimal but it should be brought under formal business."
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