Questionable BBS GDP Statistics

[Destranator]

OP-ED: GDP growth is not a numbers game

Sadiq Ahmed

• Published at 10:09 pm September 15th, 2021​

MEHEDI HASAN


Given its primacy in enabling development progress, the government attaches great importance to annual GDP growth outcome



Bangladesh has secured major development progress since independence, substantially enabled by rapid growth in GDP.

Owing to the GDP growth acceleration from an average of 4% per annum during the 1980s to 6.8% during the decade of 2009-2019, per capita gross national income (GNI) accelerated from less than $100 in the early 1970s to $1909in 2019.

Given its primacy in enabling development progress, the government attaches great importance to annual GDP growth outcome.

Not surprisingly, the Perspective Plan 2041 (PP2041) seeks to further accelerate average annual GDP growth to the 8 plus range.

All this is welcome news.

However, over the past several years there have been some worrisome signs of a potential disconnect between the GDP growth numbers published by the Bangladesh Bureau of Statistics (BBS) and GDP correlates.

Normally, GDP growth acceleration is positively correlated with rising private and public investment rates, growth in private sector credit to finance higher investment and working capital in line with GDP growth, the growth of exports and the expansion of employment.

Available evidence suggests that in recent years (FY2016-FY2019) the private investment rate has stagnated at around 22-23% of GDP, which is nearly similar to the rate found during FY2013-FY2016.

Also Read - OP-ED: Building a greener Bangladesh

Over the same periods, export growth in nominal dollars fell from 8% to 6%, private sector credit growth remained unchanged at around 14% per year’ and the growth of employment has slackened considerably.

Yet, according to BBS official national accounts, the average GDP growth rate accelerated from 6.6% during FY2013-FY2016 to 7.8% between FY2016-FY2019.

Manipulation?

Most researchers have expressed concern over a possible manipulation of the GDP growth numbers.

This is not unique to Bangladesh and similar concerns were raised in the past in Pakistan and India.

This concern came to a fore in the post Covid-19 period when BBS published a preliminary GDP growth estimate of 5.2% for FY2020.

Based on survey work, several researchers argued that there has been a sharp deceleration in economic activities in the urban areas including manufacturing, construction, trade, transport and other services during the Covid-infected periods of March-June 2020.

Yet the BBS GDP estimate did not seem to fully factor in this reality.

A similar reality check was missing from the government’s highly optimistic projection of 8.2% growth for FY2021 used in the FY2021 National Budget.

This was subsequently scaled down to 7.2% in the 8th Five Year Plan but remained essentially disconnected from reality.

Playing with GDP growth numbers is unfortunate as this sends a wrong signal to the senior policy makers about the economic health of the country.

GDP growth, when estimated properly, is simply a measure of the buoyancy of the national economy.

When this comes under pressure from exogenous shocks like Covid-19, or from a slowdown in internal or external demand, it serves as a signal to policy makers that corrective policy measures have to be taken to protect GDP growth from the down-turn.

If instead, the growth numbers are manipulated, then this will prevent corrective measures and hurt the economy in a variety of ways including unemployment, slowdown of earnings, and increase in poverty.

So, it is very important to note that GDP growth is not a numbers game.

It has real consequences for people’s welfare that cannot be masked or manipulated through an accounting process.

In this context, the recent revision of GDP growth numbers by BBS that takes a bold approach to revisit the FY2020 GDP estimates in light of the Covid-19 impact and also provide a more realistic preliminary GDP growth estimate for FY2021 is a welcome move.

Also Read - OP-ED: Government revenue crunch could constrain development progress

The revised numbers show a final GDP growth number of 3.5% for FY2020 and a preliminary GDP growth estimate of 5.5% for FY2021.

These are more realistic in light of evidence from correlates as well as survey findings.

These growth rates are low by past standards but still highly positive in light of global experience with Covid-19.

The government must not feel too disappointed and instead focus on a recovery policy package to stimulate the economy in the coming years as the negative Covid-19 impact weakens.

There is a large policy agenda in the area of exchange rate management, tax reforms, public expenditure management, trade policy reforms, reform of the investment climate, banking sector reforms, infrastructure reforms, health and education reforms, and environmental reforms that could provide a substantial boost to GDP and help Bangladesh to move back to the PP2041 growth path on a sustainable basis.

Credit given where it is due

We congratulate BBS for being able to provide their best professional estimate of GDP growth that is much more credible than the previous numbers.

We also appeal to the government to take steps to protect the integrity of the BBS and to strengthen its capacity.

The BBS has made significant progress over the years in expanding its data services.

Yet, there remains a large unfinished agenda.

Critical indicators like poverty and employment are outdated by more than 5 years; national accounts have improved on the production side but expenditure accounts are weak; consistency of national accounts with fiscal and financial accounts is lacking; quarterly GDP estimates are missing; district level GDP estimates have been long discontinued with no effort to re-institute this useful exercise.

These are just a few examples. There are other important gaps.

The BBS is a national institution and produces outputs that are public goods.

The government must understand and appreciate this and take steps to convert BBS into an autonomous national institution instead of treating it as a part of the bureaucracy that is managed and controlled by the government.

There is considerable global experience with managing the production and distribution of the national database and Bangladesh can learn from it in designing a truly autonomous national data institution.

This is a long-term agenda and a task force of experts can be established to help the government in this endeavor.

In the short term, several steps can be taken to strengthen the BBS.

First, the management of the BBS along with oversight of the General Economics Division (GED) could be assigned to the newly created post of the state minister for planning.

Since GED has the responsibility to prepare major national strategy documents including the 5-year plans, it is also a major user of BBS products.

The interaction of GED staff with BBS staff can be mutually beneficial and help improve the quality of BBS products.

Second, the government must recruit a top-rated professional statistician as the chief statistical officer with the rank and status of at least an additional secretary to provide quality control to BBS data products.

Third, a BBS advisory committee should be established from the researchers who can review major outputs of the BBS such as national accounts, household income and expenditure surveys (HIES), and the Labor Force Survey (LFS) and provide appropriate user feedback and technical guidance to BBS.

Finally, technical assistance can be sought from the donor community to upgrade the technical capacity of BBS.

In particular the UN, World Bank and the IMF have considerable global experience with the methodological issues relating to national accounts and consistency of financial flows, and BBS can upgrade its capacity in these areas through proper collaborative efforts.



The author is vice chairman of the Policy Research Institute of Bangladesh. He can be reached at sadiqahmed1952@gmail.com

OP-ED: GDP growth is not a numbers game

Given its primacy in enabling development progress, the government attaches great importance to annual GDP growth outcome

www.dhakatribune.com

Previous article that I read shows total direct investment figure that is questioning, maybe the writer makes mistake, so that I hope you check it on official data from your Investment or Finance Ministry press release

Noted.

 

[Destranator]

I hope planning minister Mannan follows through with his intent to reform and give independence to BBS to protect it from the likes of Kamal chora and gong.

 

[bluesky]

The economist also said that the targeted GDP growth rate for FY21 was revised down from 8.2 per cent to 5.2 per cent but the ‘final figures are expected to be lower.’
“The performance indicators are yet to capture the last quarter (March- June 21) which coincided with the advent of the second wave of the pandemic,” he said in the presentation.

Debapriya Bhattacharya is a great economic asset/ mind of Bangladesh. Here, I am dismayed to see a few people regularly make his character assassination. The only reason they do so is that he is a high-caste Hindu Brahmin and not a Muslim.

People should put aside someone's religion and focus on his mental caliber. However, It hurts my feeling to see how he is castigated as an Indian agent by some posters in this forum.

He is one of the sanest people in BD.

 

[bluesky]

However, over the past several years there have been some worrisome signs of a potential disconnect between the GDP growth numbers published by the Bangladesh Bureau of Statistics (BBS) and GDP correlates.

The posters here should not jump at the so-called GDP per capita. It is nothing if one sees the immobile vehicles in the streets of Dhaka, broken shops and bazaars in small towns, and the number of beggars in all the towns and cities of the country. Villages are quite good, though!!

BD needs to industrialize fast instead of "borrow and build" a few prestigious civil engineering projects that do not produce wealth. Put money into the mouth and not into the two nostrils. Industries and trade produce the wealth of a/any nation.

There is no easy shortcut to development without first going through the pains of industrialization. BD needs millions of industries. Only when this happens people can really celebrate.

 

[Bilal9]

The article is not about the handbook. The handbook is not plugging the gaps identified.


There is no evidence of CPD/Debapriya being Indian shills. There is no benefit for India to make a friendly BAL regime uncomfortable by questioning their data.

Again, more character assasination. World Bank is not a dictatorship of its chief. Besides, American neocons benefit nothing from specifically questioning BBS data.

Your favourite Zahid Hussain is quoted in many of the articles in this thread. Whom is he "shilling" for?

Bhai apney onek kothin sawal jigaisen.

Ami Mukkhu Shukkhu manush, amar oggo opinion disi.

Eto kisu bujhi nai, jani o na. Bhul hoiley khema koira den.

Zahid Hussain does not shill for anyone by the way, except himself. That is why I like him.

Guy is as clean as a freshly washed Jainamaaz, unlike these CPD guys, whose source of donations Bangladesh govt. is yet to scrutinize.

Ami Zahid sir-key personally chini, kibhabey ta nai bollam.

Bhodrolok ekjon oti niriho, ottonto "principled", shadashidha, namaji manush.

Onar chehara dekhley bujhben na, uni personal life e etota dharmik. A real "Allah'r Banda" if I ever saw one.

 

[Bilal9]

Debapriya Bhattacharya is a great economic asset/ mind of Bangladesh. Here, I am dismayed to see a few people regularly make his character assassination. The only reason they do so is that he is a high-caste Hindu Brahmin and not a Muslim.

People should put aside someone's religion and focus on his mental caliber. However, It hurts my feeling to see how he is castigated as an Indian agent by some posters in this forum.

He is one of the sanest people in BD.

@bluesky bhai - the criticisms leveled on Debapriya's opinions is not because of him being a high caste Hindu, it is the source of his org's funding.

I am not questioning Debapriya's professional credentials, nor attacking his own religion, which is unthinkable.

However it is clear he (and CPD) are certainly lobbying for 'outside parties' as 'guns for hire' to influence Bangladesh govt. policy. This trend has gotten stronger in the last two decades as many of the CPD private "thinktankers" are included in Bangladesh policy-making circles. There is certainly conflict of interest here.

Who is benefitting from CPD's lobbying? CPD certainly does not exist to further Bangladesh' interests.

If Indians are funding CPD as an Indian-influenced lobby organization, would you be okay supporting them?

Every lobby group and NGO in Bangladesh has to divulge their source of funding to the govt., has CPD done so?

We had Indians influence all our trade policies and tariff structures in Bangladesh to benefit Indian business interests for fifty long years now.

I don't believe this is right.

Enough is enough.

 

[bluesky]

@bluesky bhai - the criticisms leveled on Debapriya's opinions is not because of him being a high caste Hindu, it is the source of his org's funding.

I am not questioning Debapriya's professional credentials. However he is certainly lobbying for 'outside parties'.

Who is benefitting from CPD's lobbying? CPD certainly does not exist to further Bangladesh' interests.

If Indians are funding CPD as an Indian-influenced lobby organization, would you be okay supporting them?

We had Indians influence all our trade policies and tariff structures in Bangladesh to benefit Indian business interests for fifty long years now.

I don't believe this is right.

Enough is enough.

As far as I understand, Debapriya and India are not the same people. He is not a political man nor does he has ever shown political leaning towards any party. In fact, he is quite an asset and unlike Hasina or Khaleda is fit to run an entire country.

The issue is here because he regularly criticizes BBS data, therefore, some people automatically assume that he is an Indian agent which is not good logic. Now, everyone knows that last year the GDP growth was only 3.5% and our stupid politicians tried to cheat the world by overstating our Foreign Exchange Reserves by $7.2 billion. What a shameful country is Bangladesh!!

This guy criticizes and we throw barbs at him for being an Indian agent. It is a very sad state of our people's minds.

We from BD should better concentrate on our own achievements and failures and not how Indians fart in the open. Some Indians may do so, but it does not prove that they are not far above BD people when it is technological advancement and industrialization.

When BD cannot produce a pair of high tension bolts, India is building some of our power plants? It built Farakka and other 53 barrages. How about BD? Is it not begging for the Chinese money and technology to build the Teesta Beautification Project?

You can rest assured it will not solve overflooding. Nor it will solve the issue of water shortage during winter, and there will be a 3-billion dollar addition of foreign loans. I ask people here to come with engineering logic/ proofs to tell me how this stupid Hasina project can solve the Teesta river issue.

Now, should we not follow the Indian good examples instead of castigating some of their shortcomings? Fart they may do, but only in three months from July to September, $22 billion FDI has applied for investment in India.

How about our Golden Bangladesh. We are feeble-minded people and so are our leaders who know little about economic development. They are good at putting the cart in front of the horse.

 

[Bilal9]

As far as I understand, Debapriya and India are not the same people. He is not a political man nor does he has ever shown political leaning towards any party. In fact, he is quite an asset and unlike Hasina or Khaleda is fit to run an entire country.

The issue is here because he regularly criticizes BBS data, therefore, some people automatically assume that he is an Indian agent which is not good logic. Now, everyone knows that last year the GDP growth was only 3.5% and our stupid politicians tried to cheat the world by overstating our Foreign Exchange Reserves by $7.2 billion. What a shameful country is Bangladesh!!

This guy criticizes and we throw barbs at him for being an Indian agent. It is a very sad state of our people's minds.

We from BD should better concentrate on our own achievements and failures and not how Indians fart in the open. Some Indians may do so, but it does not prove that they are not far above BD people when it is technological advancement and industrialization.

When BD cannot produce a pair of high tension bolts, India is building some of our power plants? It built Farakka and other 53 barrages. How about BD? Is it not begging for the Chinese money and technology to build the Teesta Beautification Project?

You can rest assured it will not solve overflooding? Nor it will solve the issue of water shortage during winter, and there will be an addition of foreign loans. I ask people here to come with engineering logic/ proofs to tell me how this stupid Hasina project can solve the Teesta river issue.

Now, should we not follow the Indian good examples instead of castigating some of their shortcomings? Fart they may do, but only in three months from July to September, $22 billion FDI has applied for investment in India.

How about our Golden Bangladesh. We are feeble-minded people and so are our leaders who know little about economic development. They are good at putting the cart in front of the horse.

I hope I can put forth some counterpoints, respectfully.

I agree @bluesky bhai that we - being an economy an eighth the size of India, will not be able to produce a lot of specialized items, among them high tension bolts and of course power stations. But that is fine. Not every country in the world sucks and excels at everything. India sucks at the apparel industry and many other efforts. We suck at engineering and capital goods. It's okay.

Some of our Bangladeshi "sucks" are inexcusable, like not being able to produce railway carriages, coaches, wagons and locomotives. This is a longtime beef of mine and yours as well. Well I hear (saw this in a TV interview) that they are finally readying funding to turn Syedpur factory into a Coach-building hub with Indian assistance. Why they sought Indian assistance is to me befuddling, because India itself sought assistance from a German company (LHB) to build better quality coaches. But anyway - if they can start something then that is good. We should have sought assistance from China, as they are far ahead of India in producing these items and are cost-wise not overly much more expensive.

Compared to China or Japan, India royally sucks at engineering too. Their power stations (BHEL equipment) costs twice as much as Chinese plants do and is built at one third the pace, just looking at Bangladesh examples. Payra Power station in Patuakhali built by the Chinese was started at the same time as the Indian Maitry power station in Khulna, which is not even halfway finished now. Payra PowerStation is meanwhile completely operational and supplying power to the national grid. Hasina will inaugurate it sometime soon next March.

If you have to call Bangladesh a few names for our industrial laziness, you can call Indians the same names too. They are not way ahead of us and IMHO just as f*cked as we are, in many ways. The time for when Indians would take copious COPIUM to feel at least better than us in Bangladesh has come and gone, at least financially. Soon there will be other ways we will better ourselves too (still early days yet), but like many here have said, comparing ourselves to India is not the end-goal.

In India itself, Chinese power stations were being built at three times the rate their own vendors were completing (Chinese power generation equipment quality was cheaper and better quality than Indian stuff of course) - this was before the Doklam and other border fiascoes started. Now there is 20% duty on importing capital goods from China (including power generation equipment), Indians are doing an excellent job of shooting themselves in their own feet for Industrial development in their country.

Indian Coal-based power plants are old (falling apart), and coal is now getting more expensive. India is facing a huge power shortage. When the Paris agreement starts being enforced, India will lose in a big way.

India's power plants are running dangerously short of coal

China isn't the only major Asian economy facing an energy crisis. India may be staring at electricity shortages in the coming months because coal stocks at most of its power plants have dropped to critically low levels.

www.cnn.com

Indian technology is maybe better compared to Bangladesh, but it is nothing compare to that of China, forget Japan.

One cannot compare Bangladesh and Indian situations, India has a $1.4 Billion population base (with all adjunct responsibilities of being a large self-sufficient economy) and had post-1956 Nehruvian policies put in (like China) to achieve self sufficiency in industrial Capital goods production, including power plants and heavy electrical industry (BHEL and HMT being some examples).

Bangladesh did fine with imported capital equipment and I'd argue will do fine in the future as well.

If you notice, Malaysia or Thailand does not produce heavy electrical items either and why should they? They produce and sell whatever value-added goods they can export. I'd argue that Capital goods production has never been, nor will ever be, our specialty.

We can value-add and export on what sector we do best and let other countries (like China) add value in producing capital goods and industrial machinery. At the end of the day, not every country will not specialize at producing everything. This is entirely dependent on industrial history, size of the country, mentality and national discipline. Making money is the goal, not national pride (like Indians seem to boast about).

 

[bluesky]

I hope I can put forth some counterpoints, respectfully.

I agree @bluesky bhai that we - being an economy an eighth the size of India, will not be able to produce a lot of specialized items, among them high tension bolts and of course power stations. But that is fine. Not every country in the world sucks and excels at everything. India sucks at the apparel industry and many other efforts. We suck at engineering and capital goods. It's okay.

Some of our Bangladeshi "sucks" are inexcusable, like not being able to produce railway carriages, coaches, wagons and locomotives. This is a longtime beef of mine and yours as well. Well I hear (saw this in a TV interview) that they are finally readying funding to turn Syedpur factory into a Coach-building hub with Indian assistance. Why they sought Indian assistance is to me befuddling, because India itself sought assistance from a German company (LHB) to build better quality coaches. But anyway - if they can start something then that is good. We should have sought assistance from China, as they are far ahead of India in producing these items and are cost-wise not overly much more expensive.

Compared to China or Japan, India royally sucks at engineering too. Their power stations (BHEL equipment) costs twice as much as Chinese plants do and is built at one third the pace, just looking at Bangladesh examples. Payra Power station in Patuakhali built by the Chinese was started at the same time as the Indian Maitry power station in Khulna, which is not even halfway finished now. Payra PowerStation is meanwhile completely operational and supplying power to the national grid. Hasina will inaugurate it sometime soon next March.

If you have to call Bangladesh a few names for our industrial laziness, you can call Indians the same names too. They are not way ahead of us and IMHO just as f*cked as we are, in many ways. The time for when Indians would take copious COPIUM to feel at least better than us in Bangladesh has come and gone, at least financially. Soon there will be other ways we will better ourselves too (still early days yet), but like many here have said, comparing ourselves to India is not the end-goal.

In India itself, Chinese power stations were being built at three times the rate their own vendors were completing (Chinese power generation equipment quality was cheaper and better quality than Indian stuff of course) - this was before the Doklam and other border fiascoes started. Now there is 20% duty on importing capital goods from China (including power generation equipment), Indians are doing an excellent job of shooting themselves in their own feet for Industrial development in their country.

Indian Coal-based power plants are old (falling apart), and coal is now getting more expensive. India is facing a huge power shortage. When the Paris agreement starts being enforced, India will lose in a big way.

India's power plants are running dangerously short of coal

China isn't the only major Asian economy facing an energy crisis. India may be staring at electricity shortages in the coming months because coal stocks at most of its power plants have dropped to critically low levels.

www.cnn.com

Indian technology is maybe better compared to Bangladesh, but it is nothing compare to that of China, forget Japan.

One cannot compare Bangladesh and Indian situations, India has a $1.4 Billion population base (with all adjunct responsibilities of being a large self-sufficient economy) and had post-1956 Nehruvian policies put in (like China) to achieve self sufficiency in industrial Capital goods production, including power plants and heavy electrical industry (BHEL and HMT being some examples).

Bangladesh did fine with imported capital equipment and I'd argue will do fine in the future as well.

If you notice, Malaysia or Thailand does not produce heavy electrical items either and why should they? They produce and sell whatever value-added goods they can export. I'd argue that Capital goods production has never been, nor will ever be, our specialty.

We can value-add and export on what sector we do best and let other countries (like China) add value in producing capital goods and industrial machinery. At the end of the day, not every country will not specialize at producing everything. This is entirely dependent on industrial history, size of the country, mentality and national discipline. Making money is the goal, not national pride (like Indians seem to boast about).

I was pointing at the achievements of India compared to BD, and present-day India cannot be compared to China. However, things there are not as static as you may imply. India, being a 3rd world Asian country, has slow progress.

But, it is moving forward. Note that only in three months $22 billion FDI has arrived. So, that country will not remain an underdog forever.

Contrary to what our Hasina Bibi tries us to believe, development does not come by 2041 when today's BD still remains an underdeveloped country. A day is coming, say 50 years from now, when India will be a fast developing country. At least they have built a system whereby they do not have to ask for foreign loans for every tiny job.

This is what BD is continuously doing making its future bleak because the investment in which you guys take so pride will not produce a single dollar worth of wealth.

However, I will accept MetroRail and Karnafuli tunnel as the two vital projects.

Excess money from the export plus remittance should have been invested in building factories with imported capital goods because only industries can produce national wealth and once a country has industries it can switch to many other sectors supported by the wealth produced in this sector.

BD is a country of about 169 million people and America has about 320 million people. BD should not be compared with Malaysia. I was in Malaysia for about six months. Muslim people there love an easy life supported by oil money. Chinese are different and Malaysia is developing because of their activities.

BD has nothing except the two hands that should produce wealth in factories and workshops as the Japanese or Koreans do. It should make the best use of its foreign currency earnings.

Build factories, workshops, and plants, millions of them gradually.

 

[Destranator]

Enhancing national statistical capacity
Asjadul Kibria | Published: October 30, 2021 20:58:24

-Representational image
It was around nine years ago when a book, written by Morten Jerven, then an assistant professor at the school for international studies at Simon Fraser University in Vancouver, stirred a debate on data accuracy of Africa's economy and development. Titled, 'Poor Numbers: How We Are Misled By African Development Statistics and What To Do About It', the book unveiled a 'huge discrepancies and alarming gaps' in African figures. Javan's work also found that just three out of 23 national statistics offices had believed their own calculations of gross domestic product (GDP) covered the whole economy and 18 thought they were underestimated. The book further found that in 2011, only 17 out of 47 selected African countries had prepared their own new GDP estimates and 10 had a 'base year' that was within the previous decade. Another finding was more than half of the rankings of African economies up to 2009 was pure guess estimate.
Though Jeven's study focused on Africa, the problems identified in the work are still valid for many other developing countries in Asia. Many of the African countries are yet to get rid of the doubtful data as overestimation and underestimation are a regular phenomenon there. Some countries in Asia are also facing the problem of update and authentic data despite the fact that a number of measures have been undertaken to improve quality of data, especially, the macroeconomic indicators.
Quality of economic data largely depends on the data collection and compilation process. It needs utmost care to collect and compile the raw data at the ground level. Next step is compilation where input of raw data is critical. Wrong input may lead to distorted or inadequate final data. Staffs in national statistical bodies as well as other national institutions need to be trained properly so that they can collect and compile data accurately. In the collection stage, the staffs have to focus on the reality of the situation and collect what they find. In the compilation phase, it is also crucial to input the data collected from the ground level. The collector and compiler of the data have to ensure the authenticity of the data without thinking about the output. In the data processing phase, it is necessary to cross-check the inputs randomly and go back to compilers and even collectors if necessary. The cross-checking helps to reduce the possibility of errors and omissions.
All this work need meticulous effort. With the modernisation of data collection and compilation procedures, it has now become easier to monitor the phases. For instance, the Bangladesh Bureau of Statistics (BBS) has GPS-enabled tracking system of the field staffs. When they work in the field to collect raw data using tablet or other electronic device, the device can be tracked from headquarter to find out at which spots or places the staffs are currently working. This kind of technology helps to ensure data accuracy and transparency. Again, it is also necessary to deploy the right persons at the right places. Providing national statistics is primarily the preserve of the statisticians. They know better than anyone about the statistical method. By appointing more statisticians, national statistical office can improve the quality of data. Also, regular training of non-statistician officials and staffs is necessary.
Nevertheless, it is ultimately the decision of the policymakers that matters in supplying quality data in a transparent manner. What the policymakers think and how they want to generate quality national statistics and relevant data are the two core issues in this regard. No doubt, sometime policymakers feel uncomfortable about national statistics that portrays bad performance of the economy or any of its sectors. In Bangladesh, there are instances of the release of national statistics getting delayed mainly due to not getting clearance from the authorities concerned. For instance, BBS released the final GDP estimation for FY20 almost a year later, in the August this year. It also made the provisional GDP estimate for FY21 public which is usually released before the end of a fiscal year and quoted in the budget speech. This kind of delay also raises question about data authenticity and even sometime gives rise to e speculation over data manipulation.
Not only the national statistical agency, some other important national institutions have also some problem with data and statistics. An English daily published a report last week on the central bank's overestimation of the country's foreign exchange reserve. According to the report, the International Monetary Fund (IMF) found that Bangladesh Bank has overstated its foreign exchange reserves by $7.2 billion 'through inclusion of non-reserve assets underestimating related risks.' IMF has a clear guideline on foreign exchange reserve for all the member countries. Generally, international reserves comprise foreign currencies, other assets denominated in foreign currencies, gold reserves, special drawing rights (SDRs) and IMF reserve positions.
Though any response from the central bank in this regard is yet to be made available, this kind of overestimation is disturbing and misleading. The overestimation gives a wrong impression about the strength of the foreign exchange reserve. For instance, foreign exchange reserve worth US$ 48 billion (at the end of August) was considered enough to cover seven months' import of goods and services, according to the July-August balance of payments (BoP) table prepared by Bangladesh Bank. By deducting $7.0 billion from the 'overestimated' amount, actual reserve should be $41 billion which is equivalent to payments for around six months' import of goods and services. Definitely, the overestimation of reserve makes the monetary authority more comfortable about foreign exchange management, but the downside is it exposes the economy to the risk of absorbing any undue pressure. One may recall the formal celebration event, organised by the former governor almost a decade ago, to mark the attaining of foreign reserve worth US$10 billion.
The core issue is that be it the national statistical agency or the central bank, an increased focus on strengthened national statistical capacity and data management is a must. It is difficult to ignore any number related to national economy and it is more difficult to overcome any damage due to a wrong number.
asjadulk@gmail.com

Enhancing national statistical capacity

It was around nine years ago when a book, written by Morten Jerven, then an assistant professor at the school for international studies at Simon Fraser University in Vancouver, stirred a debate on data accuracy of Africa's economy and development. Titled, 'Poor Numbers: How We Are Misled By...

thefinancialexpress.com.bd

 

[bluesky]

Enhancing national statistical capacity

What data this writer is talking about? Our great BD govt speaks of a target GDP for a certain year in the future, and when that year arrives, the BBS accommodates that figure to show off that BD is on track of economic progress.

The GDP figures have been compiled this way for many years. BD is the only country in the world whose GDP keeps on increasing without big investments from neither local nor foreign sources having materialized.

Even only 1 or 2 billion FDI makes the politicians and newspapers shout loud as if a $200 billion investment has arrived.

BD will keep on living on the foreign handouts for many more centuries because its leaders believe the foreign countries have a responsibility to look after its welfare.

Very shameful creatures inhabit Bangladesh.

 

[Pandora]

How does inflating GDP and economic numbers affect economy?

 

[Destranator]

How does inflating GDP and economic numbers affect economy?

In an infinite number of ways - an unreliable GDP nominal messes with all other economic indicators that are dependent on it e.g.- GDP PPP, poverty rate, GDP nominal per capita, GNI, wealth growth, etc. as well all economic models and forecasts. A classic case is the government's screwed up power consumption forecast: the govt had overestimated power consumption growth based on projected economic growth and kept investing in power plants accordingly. Now we have idle power plant units costing us money including interest payments to foreign lenders.
Overestimation of wealth of the poorest 20% can mislead the government into underspending on poverty eradication programs which would only increase suffering and income inequality.
Inflated numbers can mislead private companies into overestimating market growth and make poor investment decisions which would hurt them in the long run.

 

[Pandora]

In an infinite number of ways - an unreliable GDP nominal messes with all other economic indicators that are dependent on it e.g.- GDP PPP, poverty rate, GDP nominal per capita, GNI, wealth growth, etc. as well all economic models and forecasts. A classic case is the government's screwed up power consumption forecast: the govt had overestimated power consumption growth based on projected economic growth and kept investing in power plants accordingly. Now we have idle power plant units costing us money including interest payments to foreign lenders.
Overestimation of wealth of the poorest 20% can mislead the government into underspending on poverty eradication programs which would only increase suffering and income inequality.
Inflated numbers can mislead private companies into overestimating market growth and make poor investment decisions which would hurt them in the long run.

That sucks. I guess only way is to make an independent department of statistics to avoid such fudging.

 

[Bilal9]

That sucks. I guess only way is to make an independent department of statistics to avoid such fudging.

Not gonna happen unless some agency like UN, IFC, World Bank or IMF appoints an "Independent Local Watchdog" who these agencies pay for, which means Bangladesh govt. sees it as a hostile stance taken by these Int'l agencies. That watchdog better be protected by armed commandoes.

At the end of the day, these agencies take a long-term realistic view of the corruption in 3rd world countries, they know that govts. around the world are fudging data, and they have their own special way of extrapolating real data. from the fake data reported by govts. like Bangladesh and others.