Industrial Sector Contribution to GDP Increases in FY'11

[eastwatch]

Industrial sector's share in GDP slightly up in FY’11
FE Report

The share of the industrial sector in the country's gross domestic product (GDP) has increased by 0.40 percentage point in the outgoing fiscal and that of agriculture and service sectors has slightly declined, according to the latest official survey report.

The Bangladesh Economic Survey 2011 estimated the share of the industrial sector at constant price to the country's GDP at 30.33 per cent in fiscal 2010-11 against 29.93 per cent in the previous fiscal.

The GDP represents the aggregate value of goods and services produced in an economy. The contribution of the agriculture sector to the economy showed a decline by 0.34 percentage points in the outgoing fiscal from 20.29 per cent in the previous fiscal, the survey said.

The agriculture sector registered its rate of growth at 4.96 per cent in the outgoing fiscal compared to that of 5.24 per cent in fiscal 2009-10, according to the survey.

The growth rate of the service sector in FY2010 rose to 6.63 per cent in fiscal 2010-11 from 6.47 per cent in fiscal 2009-10 and its share in the GDP stood at a slightly lower level -- by 0.06 percentage points -- at 49.72 per cent in the outgoing fiscal from 49.78 per cent in the previous fiscal.

In the outgoing FY2011, the industrial sector's estimated growth rate at constant price was up -- at 8.16 per cent from that of 6.49 per cent in FY2010.

The growth performance of manufacturing sub-sector (included in broad industrial sector category), according to the latest survey, was still higher -- at the 18.41 per cent in the outgoing FY2011 against 17.94 per cent in the previous fiscal.

Reviewing the overall performance of the national economy in the outgoing fiscal, a senior finance ministry official said the government has taken a cautious approach to maintain an upward economic growth rate in the next FY2012 by weathering the impact of the global economic situation on the economy.

Several fiscal measures will be undertaken through the proposed national budget to attract more investment and to help boost the country's economic growth rate from 6.6 per cent in fiscal '11 to 7.0 per cent in fiscal '12, he said.

Economic analyst Zaid Bakht said the recovery of the global economy has given an impetus for Bangladesh's industrial sector, facilitating its higher growth in the outgoing fiscal.

"Now the government needs to upgrade the infrastructural facilities and also improve the situation in the energy sector. If these are done properly, the economy is likely to expand further in the next fiscal also," he told the FE.

Mr. Bakht, also a senior researcher of the Bangladesh Institute of Development Studies (BIDS), said the contribution of the agriculture sector, in real terms, to the economy has been on a gradual decline while the service and industrial sectors have been doing well.

"This is a good sign for an economy. When the industrial and service sectors of an economy grow, its GDP expands at a higher rate," he said.

However, former finance adviser to the past caretaker government, Mirza Azizul Islam said the official estimate about the GDP growth rate at 6.7 per cent in the outgoing fiscal has already raised questions as this estimate does not match with the macro-economic situation including the investment scenario.

"Arithmetically, the growth projection and the sectoral contribution to the economy may be correct. But there is a further scope to review the statistics to assess the actual situation," he said.

As the falling remittance flow and lower public expenditure have affected consumption, it is difficult to maintain that the economy has been doing well, he maintained.

"Lower than expected private investment, existing pressure on exchange rate, depreciation of taka against US dollar, falling foreign aid inflow and higher lending rate do not substantiate the estimated growth rate of the industrial and service sectors as well as of the overall GDP in fiscal 2010-11," he added.

 

[TopCat]

I hope in 5 years time the industrial and service sector will contribute equally to 45/45% to the GDP. I dont mind service sector but in our subcontinent major portion of the service sectors include only Cha Wala, Biri Wala, and Kitchen market..

 

[Arko]

Its time for us to think ahead. Everyone thinks about Primary, Secondary or Tertiary sector. We seem ignorant the other one-Quaternary sector, the knowledge based sector of the economy; specially the R&D sector.

Quaternary sector of the economy - Wikipedia, the free encyclopedia

With over 160mil population, we could turn out to be a major power in this sector. We need to spend a lot more in education; quality education.

The growth in industry or service is not the only option out there. To develop faster, we need to avail every opportunity available out there.

 

[Avisheik]

I hope in 5 years time the industrial and service sector will contribute equally to 45/45% to the GDP. I dont mind service sector but in our subcontinent major portion of the service sectors include only Cha Wala, Biri Wala, and Kitchen market..

We have potential in our service sector but we are ignoring our most important part of our service sector, tourism, which brings in a lot of money. Ancient or classical places like paharpur or shonargaon can easily attract foreign tourist to come to our country. Tourism is a tertiary industry, exapanding it will bring in major development for bangladesh. Countries like maldives, sri lanka has benefitted a lot from developing their tourism industry, thu we should follow them

 

[Zabaniyah]

We have potential in our service sector but we are ignoring our most important part of our service sector, tourism, which brings in a lot of money. Ancient or classical places like paharpur or shonargaon can easily attract foreign tourist to come to our country. Tourism is a tertiary industry, exapanding it will bring in major development for bangladesh. Countries like maldives, sri lanka has benefitted a lot from developing their tourism industry, thu we should follow them

Coxs Bazar has the world's longest beach

 

[InFn-0]

We have potential in our service sector but we are ignoring our most important part of our service sector, tourism, which brings in a lot of money. Ancient or classical places like paharpur or shonargaon can easily attract foreign tourist to come to our country. Tourism is a tertiary industry, exapanding it will bring in major development for bangladesh. Countries like maldives, sri lanka has benefitted a lot from developing their tourism industry, thu we should follow them

imo there is no point in promoting tourism before you can improve the law and order situation. Is there any point in inviting foreigners and getting them mugged?

 

[Avisheik]

imo there is no point in promoting tourism before you can improve the law and order situation. Is there any point in inviting foreigners and getting them mugged?

Law and order is not a main concern.Places like mexico, which sees violent drug wars between the, gets tons of tourist every year. Furthermore, when tamil tigers were active in sri lanka, more tourist visited sri lanka than bangladesh.

 

[Zabaniyah]

Law and order is not a main concern.Places like mexico, which sees violent drug wars between the, gets tons of tourist every year. Furthermore, when tamil tigers were active in sri lanka, more tourist visited sri lanka than bangladesh.

Law & order in Bangladesh is different mate. Future political instability don't help either. And that matters as far as tourism go. I can go out at 3:00 AM in the morning in Bangkok without any problem. In Bangladesh, that is impossible unless one has a death wish.

Another important point I would like to make is that the countries you have mentioned have the necessary services, facilities and infrastructure to accommodate the tourists. Bangladesh lacks all those.

Also, hotels in Bangladesh are very expensive compared to other Asian countries.

Bangladesh has very good potential for tourism, especially eco-tourism. Sadly, there isn't enough investment to live it up.

 

[UKBengali]

The easiet place in Bangladesh to concentrate in increasing tourism would be Cox's Bazaar as it would act as a gateway to the world's longest unbroken sandy beach. There is already an airport there and it could be updated to allow the arrival of tourists from much further afield in Asia and the Middle East. The only issue would be then would the people of Bangladesh be happy in the knowledge that women will be going out onto the beaches topless, and people frequenting nightclubs and drinking alchohol, as without this then the attraction would be minimal? I suspect that this would not be the case.

 

[InFn-0]

The easiet place in Bangladesh to concentrate in increasing tourism would be Cox's Bazaar as it would act as a gateway to the world's longest unbroken sandy beach. There is already an airport there and it could be updated to allow the arrival of tourists from much further afield in Asia and the Middle East. The only issue would be then would the people of Bangladesh be happy in the knowledge that women will be going out onto the beaches topless, and people frequenetly nightclubs and drinking alchohol, as without this then the attraction would be minimal? I suspect that this would not be the case.

Yep you are absolutely right there is a social cost to tourism also. Especially when it is a country like Bangladesh. There is no way people will freely accept nightclubs, alcohol, prostitution and wearing bikinis in beaches. Also come to think of it, lets say we start developing Cox's Bazaar, prices of stuff there will skyrocket without a doubt, when that does happen will the general people be able to afford that place? Dont get me wrong i am all up for Bangladesh to hit a home run in tourism but some questions need answers.

 

[TopCat]

You people are always after money, dont you?
But those quick bucks wont be able to promote ourselves to the next level of civilization as the knowledge based sector will only bring fruits to the few middle class people but 80% of our poor will fall behind and will not be integrated to the main stream economy. Good example is our neighbour India.
To go to the next level you cant miss any step. You have to pass every step of the ladder which was done by Europe, USA, Japan and now China and East Asia.

You must have to industrialize and teach your society the taste of discipline. Second you will not be offered all the technology know how so that you can start R&D based business. Can you compete with Intel? NO. You probably thinking of doing some outsourcing and write some chepa programmes or run a call center in the country which is OK. But you cant under any circumstances loose your focus from industrialization which is the key to gain knowledge and when time comes can be utilized for R&D.

Tourism industry is like a whoreee. I dont want this in my country.

 

[eastwatch]

I hope in 5 years time the industrial and service sector will contribute equally to 45/45% to the GDP. I dont mind service sector but in our subcontinent major portion of the service sectors include only Cha Wala, Biri Wala, and Kitchen market..

Economists are saying that the service sector figure given by the govt is too low. You have said in an earlier post that the GDP growth will be 7% this FY. It may really or nearly be so when final counting is made in the next few months. Note the article below:

Is Bangladesh's growth understated?
Mamun Rashid

Good God, not many people did pay attention, while this humble writer mentioned at the Ministry of Finance recently that Bangladesh GDP growth this fiscal could be almost 7 per cent. My observation emanated from buoyant domestic sector growth evident from the performance of most of my clients in medium and large enterprises, estimated increase in boro harvest, large increase in financial sector revenues as well as product offerings, growth in micro-credit (almost 40 pct overlapping credits), rise in private sector education, health, cell phone subscriber and phenomenal growth in transport sector, i.e. service sector in its entirety, despite reported problems with power, gas and infrastructure.

I have heard economists and, more importantly, development partners being quite happy with Bangladesh food security issues, especially banking on good boro harvest and almost agreed with Ms. Matia Chowdhury and her officials on a 4 plus percent possible agriculture growth.

Take it or leave it, most of our friends operating in the food processing, manufacturing, including garments, textiles, pharma and chemicals, construction and power increased their capacity during last 12-18 months and contemplating to go further to attend increasing domestic demand. Though there are some issues with regard to small enterprises, overall manufacturing sector growth is expected to be around 10 pct.

Now comes the question of service sector. Our external sector with huge increase in export and import would reach USD 52 billion this year, almost 50 per cent of the USD 107 billion economy. Now as a humble student of Economics, I could possibly ask myself, if not someone else, while almost 80 plus per cent of our imports are capital machinery or industrial raw materials or equipment for service sector including telephony & transport, and most importantly, financial institutions earnings from international trade has increased manifold, is our service sector growth estimates are okay?

I have my doubts. In an economy with 50 per cent contribution from service sector and, more importantly, rise of consumerism and urbanization; I think we are missing out on the service sector growth estimates. One does not need to go to a remote centre in the rural Bangladesh, go to city's Apollo Hospitals, Square Hospitals, North South University, BRAC University or even any private schools or colleges or visit any transport hub, you would easily see the growth momentum in the domestic service sector.

Not to talk about the five or four star hotels, beauty parlors or boutique fashion stores. Sales are up everywhere and each one of those institutions has something to import. Therefore growth in external sector is pushing our service sector to go up and the overall growth impetus is being witnessed everywhere. And with this momentum going around everywhere including in the districts, I also don't think our domestic investment figures also to be right.

Yes, we need more growth, more importantly, equitable growth. Qualitative change in life, especially for the teeming millions at the bottom of the pyramid. We need 'distribution Economics' to work with better justice. However, above everything we should help maintain the growth momentum, drive poverty down, generate employment and wholeheartedly support national wealth creation. Continuous efforts to divert surpluses to the hungry streams should continue for this nation's journey towards a middle income economy.

(Mamun Rashid is a banker and economic analyst. He can be reached at mamun1960@gmail.com)