Is Bangladesh's officially reported GDP figure credible? Do consumption figures support Bangladesh's claim of higher per capita income than India and Pakistan? Is it the recent rebasing of GDP that boosted Bangladesh's per capita income above India's and Pakistan's? If Bangladesh has higher GDP per capita, why is its per capita consumption of energy, cement and steel so much lower than India's and Pakistan's? Does Pakistan really have a much larger informal economy than Bangladesh or India do? How long has it been since Pakistan rebased its GDP calculations? Is there a lot more currency in circulation in Pakistan than in Bangladesh and India? Let us try and answer these questions!
Rebasing GDP:
Bangladesh just rebased its GDP in 2020-21 to year 2015-16. This has boosted its per capita income by double digits for every year since 2015-16. Bangladesh's per capita income for the 2015-16 fiscal year has now gone up to $1,737 from $1,465 in the old calculation. For the 2019-2020 fiscal, the per capita income has gone up to $2,335 from $2,024. The new GDP estimate covers 21 sectors, up from 15 sectors previously. India last rebased its GDP in 2015, a change that bumped up its per capita GDP by double digits. Nigeria's last rebasing in 2012 increased the size of its economy (GDP) by nearly 90%. Pakistan's current base year is 2005-6. Rebasing which is now long overdue will almost certainly increase Pakistan's per capita income by double digits.
In its 2014 annual report, the State Bank of Pakistan talked about a number of new sectors that are either under-reported or not covered at all: "In terms of LSM growth, a number of sectors that are showing strong performance; (for example, fast moving consumer goods (FMCG) sector; plastic products; buses and trucks; and even textiles), are either under reported, or not even covered. The omission of such important sectors from official data coverage, probably explains the apparent disconnect between overall economic activity in the country and the hard numbers in LSM."
Pakistan's last economic census was done in 2003 and published in 2005, livestock census in 2006 and agriculture census in 2010. The country's economy has changed significantly since then, adding several new economic activities while others may have diminished. The Quantum Index of Large Scale Manufacturing (QIM) with 2005-06 base year gives a weight to textiles of 20.9% (Yarn 13.7 and cloth 7.2). But the textile industry has significantly changed as reflected in its exports. The value added textiles (non-yarn and non-cloth) now make almost 80% of the total textile exports. These changes are not reflected in current GDP calculations.
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| Primary Energy Consumption Per Capita. Source: British Petroleum Statistics 2021 |
Energy consumption:
Life in modern times is heavily dependent on energy. Per capita energy consumption, a key barometer of economic activity, is significantly lower in Bangladesh than in India and Pakistan. Use of electricity per capita in Bangladesh is significantly less than in India and Pakistan.
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Commercial energy use (kg of oil equivalent per capita) above refers to apparent consumption, which is equal to indigenous production plus imports and stock changes, minus exports and fuels supplied to ships and aircraft engaged in international transport. It's only 142 Kg of oil per capita in Bangladesh, much lower than 463 Kg in Pakistan and 494 Kg in India.
A more recent British Petroleum "Statistical Review of World Energy 2021" puts the per capita primary energy consumption at 9.7 Gigajoules (232 kilogram of oil equivalent) for Bangladesh, 15.7 Gj (375 kgoe) for Pakistan and 23.2 Gj (554 kgoe) for India.
Per capita consumption of primary energy in Bangladesh has grown by 59% (6.1 Gj to 9.7 Gj) since 2010, much faster than 25% (18.2 Gj to 23.2 Gj) in India and just 6% (14.8 Gj to 15.7 Gj) in Pakistan, according to the British Petroleum's "Statistical Review of World Energy 2021". This indicates much faster economic growth in Bangladesh than India or Pakistan in the last decade.
Cement Consumption:
Use of cement is another important indicator of economic and development activities, particularly in the infrastructure and housing construction sector. China and the United States, the world's biggest economies, also have the highest consumption of cement.
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| Cement Consumption. Source: International Cement Review |
Steel Consumption:
Per capita steel consumption is another important indicator of economic activity in both construction and manufacturing sectors. It goes into building housing and infrastructure as well manufacturing vehicles and home appliances. The United States and China, the world's biggest economies, are the largest consumers of steel.
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| Per Capita Steel Consumption. Source: National Steel Advisory Council |
Bangladesh is among the lowest consumers of steel products in the world. Per capita consumption of finished steel in Bangladesh (41 Kg) is lower than the regional peer Myanmar (40.5), India (75.3), Pakistan (45.7), Sri Lanka (53.5), according to the World Steel Association (WSA).
Pakistan's Informal Economy:
One way to estimate the size of the informal economy in any country is by looking at the amount of currency in circulation relative to overall money supply. This data is published regularly by all central banks in South Asia and elsewhere. Pakistan's currency in circulation to M2 ratio (about 30%) is more than double the ratios in Bangladesh (13%) and India (15%), indicating that the informal economy in Pakistan is much bigger.
Dr. Lalarukh Ejaz, an assistant professor at the Institute of Business Administration in Karachi, has estimated the size of Pakistan’s informal economy at 56% of the country’s GDP (as of 2019). This means that it’s worth around $180 billion a year, and that is a massive amount by any yardstick.
Vehicles and home appliance ownership data analyzed by Dr. Jawaid Abdul Ghani of Karachi School of Business Leadership suggests that the officially reported GDP significantly understates Pakistan's actual GDP. Indeed, many economists believe that Pakistan’s economy is at least double the size that is officially reported in the government's Economic Surveys.
Back in 2014, the State Bank of Pakistan stated in its Annual Report as follows: "In terms of LSM growth, a number of sectors that are showing strong performance; (for example, fast moving consumer goods (FMCG) sector; plastic products; buses and trucks; and even textiles), are either under reported, or not even covered. The omission of such important sectors from official data coverage, probably explains the apparent disconnect between overall economic activity in the country and the hard numbers in LSM." Pakistan's GDP has not been rebased in more than a decade. It was last rebased in 2005-6 while India’s was rebased in 2011. The recent rebasing of Bangladesh GDP to year 2015 has boosted its per capita income of Bangladesh for year 2016-16 and all subsequent years . The per capita income for the 2015-16 fiscal year has now gone up to $1737 from $1465 in the old calculation For the 2019-2020 fiscal, the per capita income has gone up to $2335 from $2024. Just rebasing the Pakistani economy will result in double digit increases in GDP for the last several years.
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| Estimates of Informal Economies in Asia in 2012. Source: IMF A research paper by economists Ali Kemal and Ahmad Waqar Qasim of PIDE (Pakistan Institute of Development Economics) estimated in 2012 that the Pakistani economy’s size then was around $400 billion. All they did was look at the consumption data to reach their conclusion. They used the data reported in regular PSLM (Pakistan Social and Living Standard Measurements) surveys on actual living standards. They found that a huge chunk of the country's economy is undocumented. |
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| Currency in Circulation to M2 Ratio Trends. Source: Business Recorder |
Pakistan's Service Sector:
Pakistan's service sector which contributes more than 50% of the country's GDP is mostly cash-based and least documented. Compared to Bangladesh and India, there is a lot more currency in circulation as a percentage of overall money supply in Pakistan. According to the State Bank of Pakistan (SBP), the currency in circulation has increased to Rs. 7.4 trillion by the end of the financial year 2020-21, up from Rs 6.7 trillion in the last financial year, a double-digit growth of 10.4% year-on-year. Currency in circulation (CIC), as percent of M2 money supply and currency-to-deposit ratio, has been increasing over the last few years. The CIC/M2 ratio is now close to 30%, according to the State Bank of Pakistan. The average CIC/M2 ratio in FY18-21 was measured at 28%, up from 22% in FY10-15. This 1.2 trillion rupee increase could have generated undocumented GDP of Rs 3.1 trillion at the historic velocity of 2.6, according to a report in The Business Recorder. In comparison to Bangladesh (CIC/M2 at 13%), Pakistan’s cash economy is double the size. Even a casual observer can see that the living standards in Pakistan are higher than those in Bangladesh and India.
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| Exports as Percentage of GDP in South Asia. Source: World Bank |
Exports:
Pakistan has performed poorly in exports growth relative to Bangladesh and India since about 2007. This has been the key source of its balance of payments crises and its repeated need for IMF bailouts. Pakistan's economic growth has essentially been constrained by its recurring balance of payment (BOP) crises as explained by Thirlwall's Law.
Summary:
Bangladesh just rebased its GDP in 2020-21 to year 2015-16. This has boosted its per capita income by double digits for every year since 2015-16, raising it above India's and Pakistan's. Based on published data on energy, cement and steel consumption, Bangladesh's claim of having a per capita GDP higher than India's and Pakistan's does not seem credible. In this age of growing energy-intensive industrialization, it does not make sense to have significantly lower use of key inputs like energy to produce higher gross domestic product. For Pakistan, it is important for policymakers to promote ways of documenting more of the economy. It's also important for finance officials to rebase the country's GDP to a more recent year than the year 2006 when it was last done.
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Sir, they have no minimum wage in Bdesh, please visit Dhaka once to understand the living standard of a below income Pakistani, Indian and Bangladeshi. Since I have seen it all. Let me assure you Pakistan's average urban population is well off. Compare charity ratio vs poverty
ReplyDeleteLook at the housing projects across Pakistan, none in loss. We have Bumper sales of transport vehicles, not on credit but cash. All cities have piped gas, n electricity. We hv one of greenest power mix the best in Asia . Pakistan offers the best trans. 2 net zero for EU n US ind.
Auto sales in Pakistan for the year 2020-21 (Including PAMA and Non PAMA members)......... 238,000 units
ReplyDeleteBike sales in Pakistan for the year 2019...........2.4 million units
Automobiles registered/sales in Bangladesh for the whole year of 2020...........20,093 units
Bikes sales in Bangladesh for year 2019.....500,000 units
All these 3 countries have 95% UNDOCUMENTED Economy. Hence, It is just not possible to know the exact GDP, which I suspect is much higher than on paper.
ReplyDeleteMalik: "All these 3 countries have 95% UNDOCUMENTED Economy. Hence, It is just not possible to know the exact GDP, which I suspect is much higher than on paper"
ReplyDeleteOne way to estimate the size of the informal economy is by looking at the amount of currency in circulation relative to overall money supply. This data is published regularly by all central banks in South Asia. Pakistan's currency in circulation to M2 ratio is more than double the percentages in Bangladesh and India, indicating that the informal economy in Pakistan is much bigger.
Pakistan's service sector which contributes more than 50% of the country's GDP is mostly cash-based and least documented. Compared to Bangladesh and India, there is a lot of currency in circulation in Pakistan. According to the State Bank of Pakistan (SBP), the currency in circulation has increased to Rs. 7.4 trillion by the end of the financial year 2020-21, up from Rs 6.7 trillion in the last financial year, a double-digit growth of 10.4% year-on-year. Currency in circulation (CIC), as percent of M2 money supply and currency-to-deposit ratio, has been increasing over the last few years. The CIC/M2 ratio is now close to 30%, according to the State Bank of Pakistan. The average CIC/M2 ratio in FY18-21 was measured at 28%, up from 22% in FY10-15. This 1.2 trillion rupee increase could have generated undocumented GDP of Rs 3.1 trillion at the historic velocity of 2.6, according to a report in The Business Recorder. In comparison to Bangladesh (CIC/M2 at 13%), Pakistan’s cash economy is double the size. Even a casual observer can see that the living standards in Pakistan are higher than those in Bangladesh and India.
It doesn't matter because Pakistan problem isn't GDP but CAD/DEBT. Look at Sri Lanka, practically bankrupt country. Its GDP can crash any day if they default, see Lebanon. Sri Lanka 80% of revenues goes to debt servicing. Pakistan this year 45% of revenue will go to debt servicing.
ReplyDeleteFor India its like 15-20% of revenues going to debt servicing. It doesn't matter how many cars are sold in Pakistan if we cannot control debt and CAD to manageable level like BD and India have done so far.
Seems Bangladesh's economy is moving positively step by step. In UAE market.
ReplyDeleteIf one refers to exports, India holds the number one slot, which may be due to most of the traders/importers are being Indian nationals and the Indian community being the most larger one.
It is also evident that if Bangladesh is not surpassing but neck to neck with Pakistani products.
About three to four years ago, I was able to find only the 'Leechi Drink (my favourite)' as BD product. Now at any shelf of supermarket, one could find edible oil (Mustard)/biscuits/spices/garments/canned food products from BD. A significant development seen.
Pakistani products are spices (Shan, Mehran, National)/Pickles/Jams/rice/frozen poultry (K&Ns products)/mutton & beef/vegitables (aalo & piyaz seasonal) and fruit (mango & kino) seasonal. Since long same inventory Pakistan is maintaining.
India is far ahead in auto/engineering/elctronics products with Bangladesh and Pakistan is nowhere to seen.
Cement sales in Pakistan ticked up 6.91% in November 2021 as total offtake stood at 4.82 million tons against 4.5 million tons in the corresponding month of previous fiscal year.
ReplyDeletehttps://tribune.com.pk/story/2332780/cement-sales-pick-up-7-in-november
According to data released by the All Pakistan Cement Manufacturers Association (APCMA) on Monday, domestic cement demand stood at 4.12 million tons in November 2021 compared to 3.74 million tons in November 2020, depicting an increase of 10.21%.
On the other hand, exports of the commodity fell 9.2% from 766,273 tons in November 2020 to 695,779 tons in November 2021.
In November 2021, mills based in the northern region sold 3.47 million tons of cement in the domestic market, which was 10.87% higher than sales of 3.13 million tons in November 2020.
Domestic offtake from mills based in the southern part of the country came in at 654,983 tons during the month under review against 613,113 tons in November 2020, a rise of 6.83%.
Exports from north-based mills plunged 69.67% as the quantity plummeted from 182,091 tons in November 2020 to just 55,234 tons in November 2021.
Meanwhile, foreign shipments from south-based mills rose 9.65% to 640,545 tons in November 2021 while the region exported 584,182 tons in the same month of last year.
Jul-Nov numbers
In the first five months (July-November) of current fiscal year, total cement sales came in at 22.86 million tons, down 4.11% from 23.83 million tons in the corresponding period of previous fiscal year.
Domestic sales of the commodity registered a slight increase of 2.84% to 20 million tons in July-November 2021 as against 19.46 million tons in July-November 2020.
Moving on to exports, foreign shipments of cement fell 34.92% to 2.85 million tons in July-November 2021 from 4.38 million tons during July-November 2020.
North-based mills sold 16.8 million tons of cement in the domestic market during the first five months of current fiscal year, showing a marginal increase of 0.17% compared to 16.76 million tons supplied in July-November 2020.
Exports from the northern region declined 52.56% to 516,003 tons during July-November 2021 against 1.09 million tons in the same period of last year.
Domestic sales by mills based in the southern region stood at 3.22 million tons during July-November 2021, registering a rise of 19.4% as opposed to 2.7 million tons in the same period of previous fiscal year.
There was, however, a substantial decline of around 29.1% in exports from the south as volumes reduced to 2.34 million tons in the first five months of current fiscal year compared to 3.3 million tons during the corresponding period of last year.
Reviewing the industrial sector, the report said 24pc growth in oil sales was reported by the Oil Marketing Companies. “112pc growth in production of cars shows phenomenal economic activity during the 1QFY22 in the manufacturing sector,” it added.
ReplyDeletehttps://www.dawn.com/news/1660508
Aggregate demand pressures are evident from 84pc rise in car sales in the 1QFY22, 65pc increase in imports and massive spike in demand for consumer credits, it said.
Demand of high-speed diesel has increased by 26pc whilst petrol consumption has risen by 14pc and electricity consumption rose by 13pc during 1QFY22, the report added.
It is a simple statistical deconstruct
ReplyDeleteLaos has a GDP of 17 Billion USD,and a pop of 7 million,which makes a per capita GDP of 2400 USD
India has GDP of 3 Trillion USD,and pop of 1.4 billion
What does the Bangla GDP prove ? It proves that the bulk of the GDP,is a very few hands - like in many nations,of Africa !
It is called inequity !
The higher CIC and per capita usage of steel and cement and power,in Pakistan ,minimum wages in Pakistan,and living standards in Pakistan,PROVES that there is EQUITY in the income distribution,and diffusion of wealth,from the apex of the pyramid.
Steel and Cement is smuggled in large quantities from Bengal and North East India and Chittagong - so that statistic,is misleading.
Power per capita,can be captured, EVEN IF THERE IS POWER THEFT - provided POWER PRODUCTION IS FULLY CAPTURED.dindooohindoo
Bangladesh per capita statistic,is emblematic of inequity.That is the statistical output.
Even in Laos the real wealth is in the hands of a few people,perhaps less than 50,and the GDP comes from plantations,potash,minerals and cocaine.
Pakistani products are spices (Shan, Mehran, National)/Pickles/Jams/rice/frozen poultry (K&Ns products)/mutton & beef/vegitables (aalo & piyaz seasonal) and fruit (mango & kino) seasonal.
ReplyDelete-----------------
Pakistani Beef exports are considered top quality. If Pakistani embassies & consulates work hard on good marketing, Pak Beef can give serious competition to Wagyu & Kobe.
Pakistani pickles, which are made with renowned Himalayan Pink Salt, are world famous for their exceptional standards of hygienic production.
Multani Chaunsa is considered the Emperor of Fruits. If marketed well, with good washing, packaging & branding, it has the potential to bring in over 150 billion$ in exports.
Pakistan's cement and clinker exports has reported mixed results between July 2021 and November 2021. According to a research house, exports observed a negative trend on a cumulative basis driven mainly by the political crisis in Afghanistan, as exports from the north reportedly remained disturbed. Elsewhere, exports from southern plants posted nominal growth.
ReplyDeleteThe industry earned US$115.99m in export revenue by dispatching 3.20Mt of cement and clinker overseas in the 5MFY21-22 (1 July-31 November 2021), compared to US$123.67m from 3.73Mt of exports in the year-ago period. Therefore, seeing a decline of 6.2 per cent and 14.6 per cent in dollar terms and quantity, respectively.
However, in November 2021, export revenues surprisingly increased 393.1 per cent MoM to US$50.54m on the shipment of 1.40Mt (+462.7 per cent MoM), compared to US$10.24m from 248,833t of exports in October.
Production in the 4MFY21-22
During July-October 2021, Pakistan's cement production decreased by 2.7 per cent YoY to 15.982Mt from 16.433Mt in the year-ago period. In October 2021 alone, production fell 15.6 per cent to 4.479Mt from 5.123Mt in the same month last year.
https://www.cemnet.com/News/story/171959/pakistan-sees-exports-surge-in-november.html
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Exports of textiles from Pakistan surged in the first five months of current fiscal year with the knitwear sector growing by more than 36 per cent.
https://www.knittingtradejournal.com/flat-knitting-news/14826-welcome-surge-in-pakistan-knitwear-exports
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According to the Pakistan Tanners Association Annual Report (2020-21), foreign shipments of leather and leather products from Pakistan increased by 8.86% from $765.35 million in fiscal year 2019-20 to $833.19 million in fiscal year 2020-21. Former Pakistan Tanners Association chairman Agha Saiddain lamented that in 2007-08, the leather exports stood at $1.25 billion per year and now, they had declined to $833 million.
With regard to the structure of leather exports, according to the Pakistan Bureau of Statistics, around 20% of total exports in fiscal year 2020-21 comprised finished leather, 34% leather garments, 31% gloves, 13% footwear and 2% leather goods.
“It is a strange thing that the export of footwear is less and leather garment is more,” Saiddain said. “The global figures are not like that. In the world, footwear makes up 65% of total leather exports.”
He added that Pakistan had not worked on their footwear sector and there were no joint ventures. Besides, the law and order situation in Karachi was unsuitable for big brands, he said.
Citing that China was the largest producer of footwear and leather goods and Pakistan produced excellent leather for big brands with lower labour costs, he was of the view that there was immense potential for cooperation between the two countries to create a win-win situation. He also suggested inclusion of joint ventures in the Special Economic Zones under the China-Pakistan Economic Corridor (CPEC).
He added that tanneries could process raw material from all over the region in Pakistan including those imported from Uzbekistan, Tajikistan, Iran, Afghanistan and Azerbaijan.
“Currently, we are utilising only 50% of our tanning capacity and 50% more capacity exists. It takes no time in increasing the capacity,” he said.
https://www.leathermag.com/news/newspakistan-leather-exports-surge-9333649
IT exports increase by 37.57% in five months
ReplyDeletehttps://pakobserver.net/it-exports-increase-by-37-57-in-five-months/
The Information Technology (IT) related exports have witnessed a 37.57 percent growth in the first five months of the current Financial Year (FY).
ICT export remittances, including telecommunication, computer, and information services for the period July-November FY2021-22 have surged to the US $1.051 billion at a growth rate of 37.57% in comparison to the US $764 million during July-November FY 2020-21, said the ministry of Information Technology in a statement here on Tuesday. In November 2021, the ICT export remittances were $221 million at a growth rate of 31.55% as compared to $168 million reported for the month of November 2020.
It is also $26 million higher than export remittances during the previous month October 2021. The net exports for the period July-November FY2021-22 stood $797 million which was 75.83% of $1.051 billion in exports.—APP
Remittances at peak 33 billion$ in 2021
ReplyDeletehttps://www.worldbank.org/en/news/press-release/2021/11/17/remittance-flows-register-robust-7-3-percent-growth-in-2021
Market insiders said around 5 lakh motorcycles were sold (in Bangladesh) in 2019, up 25 percent from 4 lakh previous year, while sales reduced to 311,016 units in 2020 due to the impact of Covid-19.
ReplyDeletehttps://www.thedailystar.net/supplements/world-motorcycle-day-2021/news/motorcycle-industry-regains-sales-2114897
Atlas Honda has recorded the highest ever monthly motorcycle sales in Pakistan. As many as 128,503 units were sold in November 2021, according to the market sources.
https://www.samaa.tv/money/2021/12/atlas-honda-records-highest-ever-motorcycle-sales-in-november/
Sales down by 36 percent for top four two-wheeler companies in India
On December 1, four hours after it released its wholesales numbers for November, Bajaj Auto, which is currently ranked fourth in India, in terms of domestic market share, announced that it had become the No. 1 motorcycle manufacturer in November – domestic and export numbers (3,38,000 units) combined. Hero MotoCorp, which is ranked first in domestic motorcycle wholesale for November, sold 3,29,185 units.
https://www.autocarindia.com/bike-news/sales-down-by-36-percent-for-top-four-two-wheeler-companies-422859
Motorcycles sales data for 2019 from Statista:
ReplyDeleteBangladesh: 650,000
Pakistan: 1,800,000
India: 15,000,000
Bangladesh: Growth Miracle or Mirage? | Center For Global Development
ReplyDeletehttps://www.cgdev.org/blog/bangladesh-growth-miracle-or-mirage
Bangladesh’s growth stems in large part from its success as an exporter of garments, which account for 84 percent of its total exports, and remittances from overseas, which amount to over 6 percent of GDP (Figure 2). The principal driver of growth is investment, which has risen from 24 percent of GDP in 2000 to 32 percent in 2019. Very little is derived from total factor productivity—below 1 percent per annum since 2000—the primary determinant of long-term growth of incomes for all countries. To paraphrase Paul Krugman, it is perspiration, not inspiration, that is responsible for Bangladesh’s performance to date.
A closer look raises other questions over the quality of this economic record.
First is the extreme dependence on a single category of exports (SITC 841-846) and the low share of exports to GDP. Whereas a country like South Korea managed to diversify away from resource-based products, garments and footwear within a matter of fifteen to twenty years—starting in 1963—and emerged stronger as an exporter of complex products including steel, machinery, chemicals, transport equipment, and consumer electronics, Bangladesh remains focused on a narrow range of relatively low-value garments more than forty years after the industry took root in 1977-1982, following investment by Korea’s Daewoo in Desh Garments and denationalization of the textile industry (Figures 3&4). T-shirts, trousers, sweaters, and shirts remain the dominant export items and 80 percent of exports were to the relatively slow-growing markets in the European Union and the United States. Although Bangladesh has attempted to diversify into pharmaceuticals and can meet most of domestic demand, export earnings were a mere $130 million in 2019.
Second is the falling share of exports in GDP, which fell to 15 percent in 2019 from a peak of 20 percent in 2012, far short of Vietnam’s ratio of 107 percent (Figure 5). In addition, the economic complexity of Bangladesh’s trade has also slipped (that ranking is down from 77 in 1991 to 123 in 2017).
Third, needed diversification is slowed by the weakness of private investment in new industries, which has been exacerbated by constraints on the availability of credit, especially to small and medium enterprises. The entry and growth of firms is also hampered by the deterioration of the business environment: Bangladesh was ranked 65th of 155 countries in 2006 in the World Bank’s Doing Business index. By 2020, it was in 168th place of 190 countries. Bangladesh was ranked 105th by the World Economic Forum’s Global Competitiveness Index for 2019, down two places from 2018.
Bangladesh now a $409b economy: GDP size up, growth down as new base year takes effect
ReplyDeletehttps://www.thedailystar.net/business/economy/news/gdp-size-growth-down-new-base-year-takes-effect-2211826
For example, Bangladesh's gross domestic product (GDP) grew at a pace of 8.15 per cent in fiscal 2018-19, the highest on record, as per the base year 2005-06. But the growth rate fell to 7.88 per cent as per the new base year of 2015-16.
A base year is a benchmark with reference to which national account figures such as GDP, gross domestic saving and gross capital formation are calculated.
According to the new base year, Bangladesh was an economy of Tk 34,840 billion in current prices in FY21, up 15.7 per cent from Tk 30,111 billion as per the previous base year.
In constant prices, it stood at Tk 27,939 billion in FY21 as per the new base year, up from Tk 12,072 billion as per the old base year, according to a document of the BBS.
In terms of dollars, the GDP size stood at $409 billion in the last fiscal year if Tk 85 per USD exchange rate is taken into account. Per capita income rose to $2,554 in FY21 as per the new calculation, which was $2,227 as per the old one.
Speaking to The Daily Star, Prof Shamsul Alam, state minister for planning, said the adoption of the new base year should have been done earlier.
Although economic growth has fallen as per the new base year, it has painted the real picture of the economy.
"The size of our economy is huge, and the new base year will reflect it," he said, adding that a real scenario would allow the government to make more informed policy decisions.
Zahid Hussain, a former chief economist of the World Bank's Dhaka office, also welcomed the new base year.
He said timely revisions to data on GDP and its components determine the accuracy of national account estimates and their comparability across countries.
With the finalisation of the new series, Bangladesh will be ahead of all other Saarc countries in terms of the recency of the national account's base year.
Only the Maldives (2014) and India (2011-12) come close, while Pakistan (2005-06) and Sri Lanka (2010) are well behind.
"Improved data sources increase the coverage of economic activities as new weights for growing industries reflect their contributions to the economy more accurately," said Hussain.
The last revision was done in 2013.
The size of the agriculture, industry and services sectors has expanded as per the new base year.
The new base year uses data on about 144 crops while computing the contribution of the agriculture sector to the GDP, which was 124 crops in the previous base year.
The gross value addition by the agriculture sector rose to Tk 4,061 billion in current prices in the last fiscal year, up from Tk 3,846 billion in the old estimate, the BBS document showed.
The industrial sector saw the addition of the data on the outputs of Ashuganj Power Station Company, North-West Power Generation Company, Rural Power Company, cold storage for food preservation, Rajshahi Wasa, and the ship-breaking industry.
In the new base year, the gross value addition of the sector stood at Tk 11,362 billion in FY21 while it was Tk 8,944 billion as per the old base year.
The BBS also carried out surveys to cover the contribution of various new services.
The data about growing ride-sharing services, privately run motor vehicles, national flag carrier Biman, private carriers US-Bangla and Novoair, private helicopter services, Bangladesh Submarine Cable Company, motion pictures, cinema halls, new banks, mobile financial services, agent banking, and private healthcare services were included.
The sector's value addition increased to Tk 18,098 billion in FY21 compared to Tk 16,144 billion from the old base year.
In a positive development, the investment-GDP ratio rose to 30.76 per cent in the last fiscal year compared to 29.92 per cent in the old base year of 2005-06.
A BBS official said the new base year would be used while calculating the GDP and other figures from now on.
Bangladesh's per capita income has increased to $2554 (USD) from $2227, a jump of nearly 16 percent, thanks to a new base year for calculating the country's gross domestic product (GDP).
ReplyDeletehttps://www.tbsnews.net/economy/rebased-gdp-increases-capita-income-almost-16-325273
The government recently finalized 2015-16 as the new base year to calculate (GDP). All national accounts will from now on be based on this new base year. Previously the government was using a base year of 2005-6.
Officials at the Bangladesh Bureau of Statistics (BBS) said the marked increase in the size of the GDP itself and attendant changes in per capita income will accrue mainly due to the inclusion of some new sectors in the calculation and price changes between the two periods.
Rebasing the GDP is the process of replacing an old base year with a more recent base year to keep up with the evolution in prices. In Bangladesh, the usual practice was to revise GDP base year every 10 years. The last time it was done was in 2013, when the base year was changed from 1995-96 to 2005-06.
However economists contend that increased economic growth and per capita income are not translating to a balanced distribution of national income among the people, leading to increased inequality where the benefits of growth are reaped by the few, not the many. Inequality has been further exacerbated during and by the Covid-19 pandemic, they said.
Selim Raihan, executive director of the South Asian Network on Economic Modeling (SANEM), was one of the economists who raised that point to UNB, even as he conceded there was some benefit from the relatively high economic growth, i.e . GDP growth, and its attendant per capita income growth.
"The ordinary people are benefiting from something. But it remains to be seen whether those gains will contribute to a transformation in the livelihoods of poor people," he added.
The new base year means GDP figures for every year since will also change. As such, the per capita income for the 2015-16 fiscal year has now gone up to $1737 from $1465 in the old calculation
For the 2019-2020 fiscal, the per capita income has gone up to $2335 from $2024.
The news that Bangladesh had surpassed big neighbour India on the per capita income score, a measure of prosperity, caused a big ripple in 2020. According to the International Monetary Fund's (IMF) latest forecast released last month (October), Bangladesh is likely to maintain that lead through to the next fiscal - a shift from its earlier position that India was likely to quickly regain the lead.
But now it estimates Bangladesh's per capita GDP at current prices will be $2,138 in 2021, while India's will be $2,116. The rebasing is likely to bump the lead even higher.
India last rebased its GDP in 2015, a change that had bumped up the figure substantially. Nigeria's last rebasing in 2012 increased the size of its economy (GDP) by nearly 90 percent.
Rebasing is important in emerging economies with large informal sectors such as Bangladesh to capture more and more sections of the informal economy under formal reporting of national income, besides new or budding sectors that are growing fast. The new estimate of GDP comprises 21 broad sectors instead of the previous 15.
Talking to the news agency, a BBS official said the main objective of the project was to sensor modernisation of national accounts and related statistics in line with international guidelines and recommendations.
The other specific objective of the project is to improve different methods of GDP compilation. Updating GDP data series (base 2005-06) from 1972-73 to date, and developing a database on GDP (base 2015-16) from 1972-73 to date using software, will also fall under the project.
GDP rebasing: no more delays!
ReplyDeletehttps://www.brecorder.com/news/40115951
There is little doubt that the size of Pakistan’s economy is understated. Many economic indictors such as per capita income and debt levels depict bleaker picture than the situation on the ground reflects. When size of the economy is understated, it makes debt to GDP ratio appear unsustainable, in turn weakening government’s bargaining power with lenders such as IMF.
One strong indicator about economic activities in any economy is national electricity consumption. Most readers would be surprise to find out that per capita grid electricity sales are 25-30 percent higher in Pakistan than in Bangladesh. Many commentators point out that GDP per capita has become higher in Bangladesh over the last decade. But it is pertinent to note that while electricity consumption is based on actual data, GDP of any economy is based on many assumptions and estimates and is based on the level of documentation in any economy. Ergo, it would appear that the level of documentation in Bangladesh is significantly higher in Bangladesh than in Pakistan.
Yet, infrastructure and construction actives are significantly greater in Pakistan than in Bangladesh. Domestic annual cement sales in Pakistan are at 48 million tons against 33 million tons in Bangladesh; in per capita terms, the spending is 10 percent higher in Pakistan. Existing road infrastructure is also of better quality and much more extensive in Pakistan (although latter may also be an indicator of greater geographic area). Similarly, number of passenger vehicles in Pakistan – including much more pertinent, vehicle per 1000 persons – is also higher.
The purpose, of course, is not to undermine the economic performance of Bangladesh, and the significant gains made by that country in past two decades. However, it is equally important to engage in undercutting ourselves. Anecdotal evidence suggests that the widely held perceptions of smaller size of economy – exacerbated by lower growth rate in recent years – also contributes to brain drain; as skilled workers seek opportunities elsewhere due to bleak outlook.
Pakistan conducted its last GDP rebasing exercise in 2005-06. GDP rebasing becomes due every ten years, yet it has been much delayed since. Since the PTI government took office, work has been undertaken on the same for the last two years. Yet, the problem is that the post of chief statistician has been vacant for over three years. There are many sectors which have experienced mushroom growth since the last rebasing exercise was completed, and they are not fully recorded in GDP. For example, the value addition segment of textile industry is not recorded in official GDP. Similarly, packaging across many industries is not included. Economic activities is simply much greater than what the official estimation represents.
Then the undocumented cash economy is also growing fast. The velocity of money (computed as nominal GDP divided by broad money – M2) is down from the average of 2.6 during FY10-14 to 2.1 percent during FY17-21. The velocity in any country doesn’t change so abruptly. The catch lies in clamping down on cash economy. The currency in circulation kept on growing since 2015, and falling velocity implies that cash is not coming back into the system. It is turning into a mini-economy unto its own.
The excess average annual CIC (difference between the average CIC/M2 ratio in FY18-21 at 28% to FY10-15 ratio at 22%), of Rs1.2 trillion could have generated undocumented GDP of Rs3.1 trillion at the historic velocity of 2.6. In comparison to Bangladesh (CIC/M2 at 13%), Pakistan’s cash economy is double the size.
Planning ministry must bring life to the Bureaus of Statistics (PBS) and speed up GDP rebasing. Once its done, apples can be compared to apples, which can also help restore Pakistan’s negotiating position with global lenders.
Bangladesh now a $409b economy: GDP size up, growth down as new base year takes effect
ReplyDeleteRejaul Karim Byron
Tue Nov 2, 2021 12:00 AM Last update on: Tue Nov 2, 2021 11:36 AM
https://www.thedailystar.net/business/economy/news/gdp-size-growth-down-new-base-year-takes-effect-2211826
The economic growth rates posted in recent years were revised downwards but the size of the economy expanded thanks to a new base year adopted by the Bangladesh Bureau of Statistics (BBS).
For example, Bangladesh's gross domestic product (GDP) grew at a pace of 8.15 per cent in fiscal 2018-19, the highest on record, as per the base year 2005-06. But the growth rate fell to 7.88 per cent as per the new base year of 2015-16.
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A base year is a benchmark with reference to which national account figures such as GDP, gross domestic saving and gross capital formation are calculated.
According to the new base year, Bangladesh was an economy of Tk 34,840 billion in current prices in FY21, up 15.7 per cent from Tk 30,111 billion as per the previous base year.
In constant prices, it stood at Tk 27,939 billion in FY21 as per the new base year, up from Tk 12,072 billion as per the old base year, according to a document of the BBS.
In terms of dollars, the GDP size stood at $409 billion in the last fiscal year if Tk 85 per USD exchange rate is taken into account. Per capita income rose to $2,554 in FY21 as per the new calculation, which was $2,227 as per the old one.
Speaking to The Daily Star, Prof Shamsul Alam, state minister for planning, said the adoption of the new base year should have been done earlier.
Although economic growth has fallen as per the new base year, it has painted the real picture of the economy.
"The size of our economy is huge, and the new base year will reflect it," he said, adding that a real scenario would allow the government to make more informed policy decisions.
Zahid Hussain, a former chief economist of the World Bank's Dhaka office, also welcomed the new base year.
He said timely revisions to data on GDP and its components determine the accuracy of national account estimates and their comparability across countries.
With the finalisation of the new series, Bangladesh will be ahead of all other Saarc countries in terms of the recency of the national account's base year.
Only the Maldives (2014) and India (2011-12) come close, while Pakistan (2005-06) and Sri Lanka (2010) are well behind.
"Improved data sources increase the coverage of economic activities as new weights for growing industries reflect their contributions to the economy more accurately," said Hussain.
The last revision was done in 2013.
The size of the agriculture, industry and services sectors has expanded as per the new base year.
The new base year uses data on about 144 crops while computing the contribution of the agriculture sector to the GDP, which was 124 crops in the previous base year.
The gross value addition by the agriculture sector rose to Tk 4,061 billion in current prices in the last fiscal year, up from Tk 3,846 billion in the old estimate, the BBS document showed.
Bangladesh now a $409b economy: GDP size up, growth down as new base year takes effect
ReplyDeleteRejaul Karim Byron
Tue Nov 2, 2021 12:00 AM Last update on: Tue Nov 2, 2021 11:36 AM
https://www.thedailystar.net/business/economy/news/gdp-size-growth-down-new-base-year-takes-effect-2211826
The industrial sector saw the addition of the data on the outputs of Ashuganj Power Station Company, North-West Power Generation Company, Rural Power Company, cold storage for food preservation, Rajshahi Wasa, and the ship-breaking industry.
In the new base year, the gross value addition of the sector stood at Tk 11,362 billion in FY21 while it was Tk 8,944 billion as per the old base year.
The BBS also carried out surveys to cover the contribution of various new services.
The data about growing ride-sharing services, privately run motor vehicles, national flag carrier Biman, private carriers US-Bangla and Novoair, private helicopter services, Bangladesh Submarine Cable Company, motion pictures, cinema halls, new banks, mobile financial services, agent banking, and private healthcare services were included.
The sector's value addition increased to Tk 18,098 billion in FY21 compared to Tk 16,144 billion from the old base year.
In a positive development, the investment-GDP ratio rose to 30.76 per cent in the last fiscal year compared to 29.92 per cent in the old base year of 2005-06.
A BBS official said the new base year would be used while calculating the GDP and other figures from now on.
Bangladesh now a $409b economy: GDP size up, growth down as new base year takes effect
ReplyDeleteRejaul Karim Byron
Tue Nov 2, 2021 12:00 AM Last update on: Tue Nov 2, 2021 11:36 AM
https://www.thedailystar.net/business/economy/news/gdp-size-growth-down-new-base-year-takes-effect-2211826
In constant prices, it stood at Tk 27,939 billion in FY21 as per the new base year, up from Tk 12,072 billion as per the old base year, according to a document of the BBS.
In terms of dollars, the GDP size stood at $409 billion in the last fiscal year if Tk 85 per USD exchange rate is taken into account. Per capita income rose to $2,554 in FY21 as per the new calculation, which was $2,227 as per the old one.
Speaking to The Daily Star, Prof Shamsul Alam, state minister for planning, said the adoption of the new base year should have been done earlier.
Although economic growth has fallen as per the new base year, it has painted the real picture of the economy.
"The size of our economy is huge, and the new base year will reflect it," he said, adding that a real scenario would allow the government to make more informed policy decisions.
Zahid Hussain, a former chief economist of the World Bank's Dhaka office, also welcomed the new base year.
He said timely revisions to data on GDP and its components determine the accuracy of national account estimates and their comparability across countries.
With the finalisation of the new series, Bangladesh will be ahead of all other Saarc countries in terms of the recency of the national account's base year.
Only the Maldives (2014) and India (2011-12) come close, while Pakistan (2005-06) and Sri Lanka (2010) are well behind.
"Improved data sources increase the coverage of economic activities as new weights for growing industries reflect their contributions to the economy more accurately," said Hussain.
The last revision was done in 2013.
The size of the agriculture, industry and services sectors has expanded as per the new base year.
The new base year uses data on about 144 crops while computing the contribution of the agriculture sector to the GDP, which was 124 crops in the previous base year.
The gross value addition by the agriculture sector rose to Tk 4,061 billion in current prices in the last fiscal year, up from Tk 3,846 billion in the old estimate, the BBS document showed.
The industrial sector saw the addition of the data on the outputs of Ashuganj Power Station Company, North-West Power Generation Company, Rural Power Company, cold storage for food preservation, Rajshahi Wasa, and the ship-breaking industry.
In the new base year, the gross value addition of the sector stood at Tk 11,362 billion in FY21 while it was Tk 8,944 billion as per the old base year.
The BBS also carried out surveys to cover the contribution of various new services.
The data about growing ride-sharing services, privately run motor vehicles, national flag carrier Biman, private carriers US-Bangla and Novoair, private helicopter services, Bangladesh Submarine Cable Company, motion pictures, cinema halls, new banks, mobile financial services, agent banking, and private healthcare services were included.
The sector's value addition increased to Tk 18,098 billion in FY21 compared to Tk 16,144 billion from the old base year.
In a positive development, the investment-GDP ratio rose to 30.76 per cent in the last fiscal year compared to 29.92 per cent in the old base year of 2005-06.
A BBS official said the new base year would be used while calculating the GDP and other figures from now on.
Bangladesh rebased GDP now official in national accounting
ReplyDeletehttps://unb.com.bd/category/Bangladesh/rebased-gdp-now-official-in-national-accounting/82864
The planning minister said the net of various products as GDP has expanded under the new base year. As a result, per capita income has increased. At the same time, GDP growth has increased.
The average per capita income has risen to $2,554 from $2,226 previously.
Agriculture sector: About 20 new crops have been added to the crop sub-sector with all the data included in this sector for GDP calculation. New crops include dragon fruit, strawberry, capsicum, latkan, kachushak, sharufa, malta etc. Cattle and poultry production data, new survey data in the forest sector and other up-to-date information have been included. As a result value addition from the agriculture sector increased in the GDP by 14.80 per cent.
Industrial Sector: Earlier, all the data included in this sector for calculating GDP included updated data from New Manufacturing Industry Survey (SMI) and construction sector survey, data from household waste collection. Overall current prices of value addition in the industrial sector have increased by 36.1 per cent.
Services sector: New survey of transport sector, Uber, Pathao, data of new private helicopter companies, new survey of real estate sector, data of mobile banks, agent banks, information of non-profit organizations of government and education and health sector have all been included. Overall, the size of value addition in the services sector showed growth by 14.3 percent in the sector.
South Africa has rebased its gross domestic product (GDP). The how and the why
ReplyDeletehttps://theconversation.com/south-africa-has-rebased-its-gross-domestic-product-gdp-the-how-and-the-why-167309
What is the GDP of an economy? There are three definitions. All are equivalent. GDP can be measured:
as the value of the final goods and services produced by an economy in a particular period (a year, or a quarter); or
as the sum of value added in an economy in a particular period; or
the sum of incomes in the economy in a particular period.
So why the need to periodically rebase an economy’s GDP? Because economies change over time, in particular developing ones. How often rebasing is done in a country like South Africa depends on resources and priorities. Statistics South Africa used to do rebasing exercises every five years. Rebasing was done in 1999, 2004, 2009 and 2014. It has taken a bit longer for the latest one because of the pandemic.
The frequency matters because of the structural transformation in an economy, inflation and technological progress. For instance, during the process of economic development, or of structural transformation, economies go through a process of urbanisation, where more and more people live, study, work and produce goods and services in cities. This leads to the growth of certain sectors, such as services and manufacturing which are more productive and demand more human capital compared with sectors like agriculture. The effect of this is that the relative importance of the agricultural sector diminishes as services and manufacturing increase.
This process of structural transformation is general. Countries like the US and the UK have all gone through it. South Africa is going through it right now.
The change means that the weight of particular sectors changes in the measurement of GDP. For example, if there are less and less people working in agriculture, wages in that sector will be different than five years ago. If general prices are increasing inflation has to be taken into account and fast technological progress affects prices and wages – and demand and supply of human capital – as well.
Government agencies that calculate GDPs use a base year. For instance, Statistics South Africa, before the latest rebasing, was using 2010 prices to get the real South African GDP. To get to the real GDP in 2018, the South African nominal GDP in 2018 was being multiplied by a 2010 price index.
And prices change, not only because of inflation, but also because of changes in quality. Think of an intel processor and how it has changed its speed over time, or how banking used to be done in 2010 – in the branch – and how it was done in 2018 – on the smart phone.
Nominal and real changes happen in an economy over time. Therefore the need for periodical rebasing so that the data are always accurate.
We do not expect dramatic changes attached to rebasing exercises happening every five years. South Africa is a developing economy, which has been changing and growing over time, but its growth rates are not as dramatic as say, a country like China. So, we expect some changes, but not dramatic ones.
For example, services have had substantial (but not dramatic) positive changes with the rebasing – in other words it has increased in relative size to other sectors.
To make sense of that, just think in terms of the massive developments around the city in areas such as Rosebank and Sandton. All those new buildings are being occupied by people providing services, and with human capital. In two words, structural transformation.
Pakistan to rebase it GDP to 2015-16
ReplyDeletehttps://www.thenews.com.pk/print/915868-rebasing-of-national-accounts-to-be-carried-out
The World Bank (WB) has validated the overall methodology for conducting the rebasing exercises in Pakistan and pointed out some deficiencies in respective areas, which could be rectified within the next few days.
The Pakistan Bureau of Statistics (PBS) is ready to present the re-basing of national accounts exercise before the high-powered technical committee, Governance Council and then Economic Coordination Committee of the Cabinet (ECC).
With this exercise, some key economic indicators will be improved but some will be further worsened. For instance, with the ballooning of GDP growth, total public debt in percentage of GDP will be improved. However, the FBR’s tax-to-GDP ratio may be worsened.
"We have accomplished 36 surveys/studies out of total assigned 42 exercises for changing the base year from 2005-06 to 2015-16 to calculate figures of national accounts as it will help ballooning the overall GDP growth rate in a substantial manner,” top official sources confirmed to The News.
“The re-basing of National Accounts will be accomplished within the current fiscal year and provisional GDP growth figure for 2021-22 will be calculated on the basis of rebasing exercise."
Top official sources said there are some practical difficulties in the way of rebasing of national accounts as the PBS conducted 42 studies on various sectors of the national economy to finalise weights on the basis of the latest data compiled in the fiscal year 2015-16. The PBS conducted different studies in the last four years. Earlier, such studies were conducted by consultants through the private sector but for the first time it was being done by the PBS itself, so the quality of the done studies needs to be thoroughly scrutinized before granting approval for rebasing of national accounts on the basis of 2015-16.
The last rebasing of national accounts was done in 2005-6 during the Musharraf/Shaukat Aziz regime. Earlier, the rebasing was done in 1999-2000 after a period of 20 years, so it was decided that the rebasing exercise would be done after five years. The economic census was also done in 2005-6 and the national accounts were re-based on the basis of the same data, so it was decided that the rebasing of national accounts should be done after a period of 10 years.
The PBS captured the data on the stipulated time-frame but for accomplishing all other requirements, it took almost four years for conducting other studies. Now it is hoped that the rebasing exercise will be implemented to change the base year from 2005-6 to 2015-16 because in 10 years, there are many ground realities changed. So fresh data capturing methodology should be devised to get a more realistic picture of the national economy.
Deficient data
ReplyDeleteBy Ishrat HusainDecember 24, 2021
https://www.thenews.com.pk/print/919381-deficient-data
In most countries, the national accounts are revised at intervals of five years or so. GDP at current and constant factor prices in Pakistan is still derived from the 2005-06 base, for which some of the surveys were carried out several years before the base year. The 2015-16 rebasing exercise has been completed for quite some time and is in danger of becoming redundant because of new capacity, new activities and new sectors that have emerged since these surveys were undertaken. Rebasing and extrapolation to the current year would show a substantial increase in the size of the economy, and per capita income providing a more realistic picture. Of course, the result of the rebasing is likely to lead to uproar by certain quarters as it would show decline in debt, fiscal and current account deficits/ GDP ratios and a lowering of tax, imports and exports ratios etc relative to GDP. The present ratios are misleading and do not guide policymakers in taking the right remedial actions.
----------------
Let me give one specific example of the unreliability and inaccuracy of the present data. The Quantum Index of Large Scale Manufacturing (QIM) with 2005-06 as base year gives a weight to textiles of 20.9 percent (Yarn 13.7 and cloth 7.2). If we examine the exports of textiles, the value added textiles (non-yarn and non-cloth) form almost 80 percent of the total textile exports. All the large exporting houses producing value added goods are not reflected in this weightage for LSM. So the critics rightly point out as to how exports are growing when the yarn and cloth output are declining.
The QIM is constructed in an ad-hoc manner by combining the data from the Oil Companies Advisory Committee (11 items), the Ministry of Industries and Production (36 items), and the Provincial Bureaus (65 items) reporting changes on a monthly basis in the components of the index. Not only is the methodology questionable, the coverage is also incomplete and inaccurate. The provincial bureaus – except Punjab – do not have the capacity to collect the primary information and therefore rely on the industry sources (which usually understate production to evade taxes) or secondary data.
Any correlations with the usage of inputs or electricity or gas consumption are not attempted to verify the authenticity and whatever raw data is reported goes into the index unvarnished. Decisions on export or imports of sugar were made on the basis of the production data provided by the sugar millers which subsequently was found to be erroneous. The same is the case with cement, fertilisers, automobiles etc output data that is included without validation or independent verification.
The last Census of Manufacturing Industries (CMI) which was used in the National Accounts and QMI was that of 2005-06. CMI 2015-16 was completed a few years ago and my information about Punjab shows there is quantum jump in the index compared to what we are using at present. The PBS and the Planning Commission should have made the switch but it hasn’t been done so far. This would affect our national accounts and the industry sector but also the services sector whose value added is dependent on the quantum of commodity producing sectors.
Pakistan’s GDP size expands increased by 11.3%t o $346.76 billion in FY21 showing growth of 5.37%
ReplyDeletehttps://www.app.com.pk/business/pakistans-gdp-size-expands-to-346-76-bn-in-fy21-showing-growth-of-5-37/
The National Accounts Committee (NAC) Thursday approved the revised figures of Pakistan’s Gross Domestic Product (GDP) growth rate of 5.37% against the provisional numbers of 3.9% for the fiscal year 2020-21 (FY21).
According to the final numbers approved by the committee, the per capita increased to Rs 266,614 or US$ 1,666 in 2020-21 while the size of the economy reached to US$ 346.76 billion.
The Committee also accorded approval to the change of base of National Accounts from 2005-06 to 2015-16.
The 104th meeting of the NAC was held here under the Chairmanship of Secretary ministry of Planning, Development & Special Initiatives Abdul Aziz Uqaili.
Due to improved coverage and better estimation of input output structure of industries, the gross value addition has increased by Rs. 3.1 trillion in the base year 2015-16 from Rs. 27.4 to Rs. 30.5 trillion, showing an increase of 11.3% in the Gross Value Added (GVA) for the base year 2015-16.
This shows that in the previous base of 2005-06 economy was under estimated by 11.3%. Agriculture showed an increase of 8.3% from Rs. 6.7 to 7.3 trillion, industry grew by 11.9% from Rs. 5.3 to 5.9 trillion and services enhanced by 12.5% from Rs. 15.3 to 17.3 trillion.
With rebasing and level shift of economy from Rs. 29.1 trillion to Rs. 32.7 trillion in 2015-16, the GDP at market prices increased to 55.5 trillion in 2021, and Gross National Income increased to Rs. 59.3 trillion.
The per capita income increased to Rs 266,614 or US$ 1,666 in 2020-21. The size of the economy reached to US$ 346.76 billion.
According to a press release issued by the ministry of Planning, the Ministry and Pakistan Bureau of Statistics (PBS) have decided to devise a mechanism to rebase National Accounts as well as price statistics after every five years in line with the best practice adopted by the most of the countries of the world, as both go in tandem to capture more areas and activities, which have taken place in the last couple of years.
The PBS being a National Statistical Organization has to comply with the international standards while compiling national indicators of economy.
The methodology adopted in the re-basing is in line with the 2008 System of National Accounts (SNA). During 2014-15 to 2016-17, the PBS has conducted about 45 census, surveys, and studies to properly capture the economic activities in the country.
The results of these census, surveys, and studies have already been reviewed by internal and World Bank experts.
Efforts have been made to include new economic activities. Dedicated surveys and studies have been
conducted to capture the share of economic activities in the economy. Input output ratios of various
industries have been updated, which has resulted in better reflection of their contribution in the
economy.
Country registered 14-year high GDP growth in 2021 despite COVID-19: Asad Umar
ReplyDeletehttps://www.geo.tv/latest/394351-asad-umar-claims-record-economic-growth-despite-being-hit-by-covid-19
Last fiscal year, country’s economic growth rate recorded an all-time high in 14 years at 5.7%, minister says.
Says major industries also succeed in maintaining the growth rate at 15% which is more than average.
In last two weeks, Opposition came up with two failed narratives, PTI leader says.
FAISALABAD: Federal Minister for Planning, Development, and Special Initiatives Asad Umar claimed on Thursday that despite being hit by COVID-19, Pakistan’s economy witnessed record development under the leadership of Imran Khan, Geo News reported.
Coronavirus had badly affected the world’s economy, but last year, Pakistan’s economic growth shot up as compared to the last 14 years, he said.
Talking to journalists in Faisalabad, the PTI leader shed light on the economy and said that during the last fiscal year, the country’s economic growth rate was forecast at 3.4% but it recorded an all-time high in 14 years at 5.7%.
Coronavirus has battered the world’s economy, but under the leadership of Imran Khan Pakistan’s economy is progressing toward development, he added.
The federal minister further said that the last year, the growth of industries recorded a 15-year high, while major industries also succeed in maintaining the growth rate at 15% which is more than average.
Historic increases in the production of wheat were recorded while potato, tomato, onion, and natural gas and crude oil production also shot up.
Umar also lashed out at the Opposition, saying that in the last two weeks, it came up with two failed narratives.
"I pity for them (the Opposition) as the government vanquished them in National Assembly after passing bills with a majority," he said.
Arif Habib Limited
ReplyDelete@ArifHabibLtd
The NAC, in its 104th meeting, reviewed the change of base of National Accounts from FY06 to FY16. With this revision, the final estimates of GDPg of FY21 came out to be 5.57%.
Full report
https://arifhabib.com/r/GDPg.pdf
Arif Habib Limited
ReplyDelete@ArifHabibLtd
Historic high-power generation registered in CY21, 136,572 GWh, up by 10.6% YoY. The sharp inflection in economic activity post supportive measures by the Gov’t/SBP remained instrumental in achieving this growth.
https://twitter.com/ArifHabibLtd/status/1484519832921989122?s=20
-------------------
Arif Habib Limited
@ArifHabibLtd
*Power Generation up by 9.3% YoY during 1HFY22*
Dec’21: 8,828 GWh, +12.0% YoY
1HFY22: 74,396 GWh , +9.3% YoY
https://twitter.com/ArifHabibLtd/status/1484511672001871878?s=20
The Bangladesh Bureau of Statistics (BBS) has come up with the final figure of the Gross Domestic Product (GDP) of Bangladesh in the fiscal 2020-21, reflecting a sharp and clear V-shaped recovery from the devastating impacts of Covid-19 on the economy.
ReplyDeletehttps://www.tbsnews.net/economy/bbs-claims-sharp-v-shaped-recovery-economists-differ-368278
Nearly 10 months after the fiscal year had ended, the BBS revealed that the economy achieved 6.94% of growth in the last fiscal year – a little more than double the growth of 3.45% in FY20.
Most think tanks from home and abroad were anticipating an L-shaped prolonged recovery path for Bangladesh with about 4% of growth. Some of the organisations predicted a U-shaped moderate growth path with more than 5% of growth.
But the final estimation of the BBS surpassed the projection of all development partners. Even the final growth figure of the BBS is 1.51 percentage point higher than its preliminary estimation.
Analysing the performance of the first nine months of the fiscal year and projection of the last three months, the national statistical organisation earlier estimated 5.43% growth for FY21.
The huge jump in growth in the final calculation made policymakers and officials of the government happier. But what economists and independent experts find does not match the reality.
Planning Minister MA Mannan revealed the final GDP report of the BBS at a press briefing following the meeting of the Executive Committee of the National Economic Council (Ecnec) on Tuesday at the NEC auditorium in Dhaka.
He said, "The GDP growth for the last fiscal year reached 6.94%, which was 5.43% during the provisional estimate, however by the end, it increased by 1.51 percentage points."
The GDP growth edged down to three-decade-low 3.45% in FY20 due to the Covid fallout, said the BBS final report on 5 August last year.
Calling the growth "a miracle" amid the pandemic, the minister said, "Our GDP growth upturned to nearly 7% while many other countries took a hit."
He said the prime minister is very happy with the achievement and she has dedicated this to the countrymen.
"As per the initial estimation, the size of GDP was $410.82 billion, which later rose to $416.26 billion," Minister MA Mannan added.
Meanwhile, Bangladesh's per capita income has increased to $2,591 that previously was estimated to be $2,554.
State Minister for Planning Dr Shamsul Alam said, "The growth in national GDP is proof that our economy has bolstered since we have made progress in sectors, such as exports and remittances."
The IMF projected 4.60% of GDP growth for the last fiscal year, while the projection of the World Bank and Asian Development Bank was between 5% and 5.5%.
Asked how the BBS estimate differs from the other projection, Shamsul Alam said development partners and any other organisations have no capacity to estimate the final figure of the GDP. They make projections using data from the BBS and some major economic indicators. That is why the final figure of the BBS is more appropriate than the others', he added.
The planning minister said, "We are confident in data generated by ourselves. We rely on the BBS data."
He asked for positive criticism and research to find a mismatch in the BBS Data if there is any.
Dr Ahsan H Mansur, executive Director at the Policy Research Institute of Bangladesh, told The Business Standard that 6.94% economic growth does not reflect the reality of the last fiscal year.
Mentioning a 5.43% provisional growth, he questioned what was the major change in the economy in the last three months that boosted the growth to near about 7%?
Economic activities were affected by the Delta variant of Covid-19 in April and May. Only the month of June was relatively stable, he said, adding that a 5.5% growth for FY21 is relevant, he added.
He further said investment in the final calculation increased by only 2.19% when compared with the provisional estimate.
The Bangladesh Bureau of Statistics (BBS) has come up with the final figure of the Gross Domestic Product (GDP) of Bangladesh in the fiscal 2020-21, reflecting a sharp and clear V-shaped recovery from the devastating impacts of Covid-19 on the economy.
ReplyDeletehttps://www.tbsnews.net/economy/bbs-claims-sharp-v-shaped-recovery-economists-differ-368278
'Dr Ahsan H Mansur, executive Director at the Policy Research Institute of Bangladesh, told The Business Standard that 6.94% economic growth does not reflect the reality of the last fiscal year.
Mentioning a 5.43% provisional growth, he questioned what was the major change in the economy in the last three months that boosted the growth to near about 7%?
Economic activities were affected by the Delta variant of Covid-19 in April and May. Only the month of June was relatively stable, he said, adding that a 5.5% growth for FY21 is relevant, he added.
He further said investment in the final calculation increased by only 2.19% when compared with the provisional estimate.
He further said investment in the final calculation increased by only 2.19% when compared with the provisional estimate.
A 1% growth in the GDP requires at least 4% of investment in Bangladesh. "How an additional 2% investment can raise GDP by 1.51%?," questioned the former IMF economist.
"It is difficult to find the link between the growth data provided by the BBS and the reality," said Dr Zahid Hossain, former lead economist of the World Bank's Dhaka office.
He said the resource balances of exports and imports widened by more than 32% in the last fiscal year.
The government expenditure increased by only 8.60% over the year in a nominal term, which would be around 3% excluding the inflation rate. There was stagnation in investment as reflected by a lower rate of private sector credit growth, he added.
Areas where GDP growth increase
The size of the GDP reached Tk3530,185 crore in the last fiscal year in a nominal term having 11.35% higher growth than Tk3170,469 crore in FY20. The BBS found GDP worth Tk3484,033 crore in the provisional estimate, which increased by Tk46,152 crore in the final estimation.
Per capita GNI was Tk197199 in FY20, which reached Tk219,738 in FY21. The income of each person increased by Tk22,539 on average, up by 11.43% over the last fiscal year.
Analysing the BBS data, it found that the rebound of the industry sector helped the economy achieve remarkable growth in the last fiscal year.
The final calculation of the BBS found 10.29% growth in the industry sector, which was only 6% in the provisional estimate. The sector grew only by 3.61% in FY20.
The share of the industry reached 34.61 according to the final estimate, which was 33.89 in the provisional estimate.
The agriculture sector finally grew by 3.17% in the last fiscal year, which is 0.8 percentage points higher than the provisional estimate of 2.37% but 0.25 percentage points lower than in FY20.
The share of the sector to GDP dropped to 12.09% in FY21 from 12.44% in FY20.
Growth of the service sector and its relative share to the GDP reduced in the final estimation compared to the provisional estimate.
The BBS earlier found 5.86% growth in the service sector, which dropped to 5.73% in the final estimate. Share of the sector reduced to 53.30% of the GDP in the last fiscal year from 53.42% in FY20.
"Our imports are set to reach $85 billion by this year, while exports won't be more than $50 billion. And, the trade deficit of $35 billion can't be bridged by remittances alone," Islam told DW, adding: "We will have to live with around a $10 billion shortfall this year.
ReplyDeletehttps://www.dw.com/en/is-bangladesh-heading-toward-a-sri-lanka-like-crisis/a-61838597
Is Bangladesh heading toward a Sri Lanka-like crisis?
Like Colombo, Dhaka has also taken on massive foreign loans to embark on what critics call "white elephant" projects. The economic turmoil in Sri Lanka should serve as a cautionary tale, say experts.
Surge in services demand helps steady India’s economy in August | Mint
ReplyDeletehttps://www.livemint.com/news/india/surge-in-services-demand-helps-steady-india-s-economy-in-august-11663113708287.html
Electricity consumption, a widely used proxy to gauge demand in industrial and manufacturing sectors, showed activity is picking up. Numbers from India’s power ministry showed peak demand met in August jumped to 185 gigawatt from 167 gigawatt a month ago. However, rising unemployment numbers tempered the overall optimism, with data from the Centre for Monitoring Indian Economy Pvt. showing the jobless rate climbed to 8.3 percent -- the highest level in a year. That shows the current pace of expansion isn’t enough to create jobs for the million plus people joining the workforce every month.
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https://www.reuters.com/article/us-pakistan-energy-climate-change-featur-idUSKBN2AO27C
When electricity projects now in the pipeline are completed in the next few years, Pakistan will have about 38,000 MW of capacity, Gauhar said. But its current summertime peak demand is 25,000 MW, with electricity use falling to 12,000 MW in the winter, he said.
Bangladesh now has a power generation capacity in excess of 21,000 MW. On the other hand, power demand and generation in mid-February this year were in the range of 9,000 MW, less than half of the overall capacity. Even last summer the peak demand and generation hardly reached 12,000 MW. Considering the fact that the ideal power generation reserve margin for most countries is 10-20 percent, the excess capacity in Bangladesh is a mismatch with the demand, for being "overly fatty" so to say.
ReplyDeletehttps://www.thedailystar.net/opinion/news/power-generation-bangladesh-important-facts-look-2052261
Pakistan's power production hits record high at 24,284MW in 2021
ReplyDeletehttps://tribune.com.pk/story/2309291/pakistans-power-production-hits-record-high-at-24284mw
----------------------
Economic Survey 2021-22: Pakistan installed capacity 41,557 MW in 2022
https://www.finance.gov.pk/survey/chapter_22/PES14-ENERGY.pdf
Pakistan's Electricity Generation Capacity
The total electricity generation capacity during July-April 2022 has increased by 11.5 percent and it reached 41,557 MW from 37261 MW during the same period last fiscal
Arif Habib Limited
ReplyDelete@ArifHabibLtd
Power Generation Aug’22
Power Generation
Aug’22: 14,053 GWh (18,888 MW), -12.6% YoY | -0.7% MoM
2MFY23: 28,203 GWh (18,954 MW), -11.2% YoY
Fuel Cost
Aug’22: PKR 10.06/KWh, +57% YoY | -6% MoM
2MFY23: PKR 10.39/KWh, +61% YoY
https://twitter.com/ArifHabibLtd/status/1571073410486407169?s=20&t=sptq7d0z3ATWm_L0h6R1uA
The ground under Sheikh Hasina’s feet is shifting
ReplyDeleteBy Avinash Paliwal
https://www.hindustantimes.com/opinion/the-ground-under-sheikh-hasina-s-feet-is-shifting-101657725078715.html
Bangladesh's foreign minister
AK Abdul Momen arrived in
India last month to fight polit-
ical fires. But he found himself
dealing with massive floods
that hit Sylhet and Assam.
Nature has its ways to convey
that not all is well in India's
near-east. Far from the glitz
about Bangladesh's economic
success, on display during the
recent inauguration of the
Padma Bridge, clampdown on
Islamists, and shrewd man-
agement of big power rivalries,
is a parallel potent reality of
Prime Minister Sheikh Has-
ina's authoritarianism,
heightened polarisation, and
economic distress. As an
Indian official mentioned to
me, and a Bangladeshi official
echoed. Hasina "has built a
house of cards"
The economic, social, and
political ground under Has-
ina's feet is shifting in real
time. It is slow enough to be
dismissed as non-urgent, but
sure enough to become press-
ing, if not dealt with urgently.
With general elections due in
2023, and external debt repay-
ment schedules kicking in
from 2024, it is a matter of
time for the veneer of (forced)
stability to lose its sheen. The
risk of dislocation, if not col-
lapse, of this so-called house
of cards has increased in
recent years, and it could
undermine whatever is left of
India's connectivity aspira-
tions in its near east.
Domestically, the Hasina gov-
ernment has exacerbated two
contradictions in a tradition-
ally polarised polity. One, she
is in power, but with little to
no electoral legitimacy. The
Awami League's (AL) manipu-
lation of the 2014 and 20118
elections (a practice not just
reserved for national elections
and against opponents),
unceasing harassment of its
key opponent, the Bangladesh
Nationalist Party (BNP), gag-
ging of media, social media
monitoring using advanced
digital surveillance, and a
forced tilt towards the conser-
vative Islamic Right as a bal-
ancing move after targeting
these formations using force,
has created wide pockets of
intense frustration.
Unlike her father, Sheikh
Mujibur Rahman, who created
a one-party State, but failed to
contain a famine in 1974, Has-
ina has placed her bets on eco-
nomic development. The argu-
ment runs that good economic
performance coupled with lib
eral use of force will make a
one-party State under Has-
ina's leadership sustainable.
But this is where the second
contradiction kicks in.
Bangladesh's external debt to
Gross Domestic Product ratio
has increased to 21.8%, import
spending has shot up by nearly
44%, forex reserves of $42
billion are falling and can
cover about five months'
worth of imports, and the rev-
enue from readymade gar-
ments export and remittances
is not keeping pace with the
fast rising costs to the
exchequer.
Couple this with the global
inflation created by the Rus-
sia-ukraine war and United
Statesled sanctions, and it
becomes clear why Momen is
asking India to remove anti-
dumping duties on Banglade-
shi jute exports. Further com-
plicating this situation is
Dhaka's propensity to accept
external loans for infrastruc-
tural projects at highly inflated
costs, making repayment dif-
ficult. One of the cases in point
is the 2015 Rooppur Nuclear
Power Plant deal with Russia
for which Dhaka is to repay
$13.5 billion. India paid $3 bil-
lion for a similar plant in
Kudankulam.
Why does Dhaka accept such
deals? Because external fin-
ance fuels (limited) infra-
structural growth, chronic
corruption, and keeps the
political illusion of economic
development alive. To be clear
and fair, Bangladesh's eco-
nomic journey has been more
than commendable. But to
expect an economic miracle,
which is bound to dwindle due
to internal or external shocks,
to sustain a corrupt system
pretending to be a democracy
is a tall ask. Herein, Hasina has
ensured that neither the
Islamists nor the BNP
which enjovs public sympathy,
even if it may not get a fair
election - pose a serious
challenge to her.
Since mid-2021, global commodity prices, especially of oil, have begun to rise. This was intensified by the Russian invasion of Ukraine in March. As a consequence, Bangladesh, as a major energy importer, is facing a number of challenges. Its foreign currency reserves are declining and the value of its currency, the taka, is weakening. Electricity load shedding has worsened, adding to the woes of citizens.
ReplyDeletehttps://scroll.in/article/1031735/how-global-economic-instability-is-hurting-bangladesh-until-recently-an-asian-tiger-in-the-making
As a result, the cost of imports in Bangladesh has increased significantly even as earnings from exports have increased only moderately.
In the financial year 2022, the expenditure on imports increased by 36%, compared to 20% the previous financial year. The high import cost is due in part to the increased demand for imported goods and in part to the higher import prices on the global market.
As a result, the terms of trade have gone against Bangladesh. During 2021-’22, the import-price index increased by 5.06%, while the export-price index increased by 3.23%. This has hurt the current account balance.
In the financial year 2022, the current account balance reported a deficit of $18.70 billion compared to the previous year’s deficit of $4.58 billion.
The current account deficit in Bangladesh is generally met by remittances from abroad, which have also decreased significantly in the financial year 2022. Remittances fell by 14% in the financial year 2022, following a 36% increase in the financial year 2021. This has affected the balance of payments, foreign currency reserves, and weakened the taka against the US dollar.
Despite adjusting the exchange rate to match the market demand, the Bangladesh Bank continued to sell dollars from reserves to keep the taka stable. As a result, reserves declined further.
Foreign currency reserves fell to $39.77 billion on July 14 from $46.39 billion the previous year. Though the country has received relatively large remittances from expatriates in July due to Eid, the taka’s value against the dollar is deteriorating.
Foreign exchange reserves are not only critical for maintaining the exchange rate of domestic currency but also contribute significantly to increased capital investment and long-term economic growth.
To keep the taka’s value stable, the Bangladesh government and Bangladesh Bank have taken measures to reduce imports and increase the flow of dollars. The government has discouraged the import of luxury items. The depreciation of the taka compelled the government to seek a loan from the International Monetary Fund. Only a year ago, Bangladesh had supported Sri Lanka with $250 million.
The weakening of the Taka against the dollar not only makes imports more expensive, but also raises the domestic prices of imported goods and other non-imported goods due to the substitution effect – which is when the sales of a product decline due to an increase in its price which prompts consumers to switch to cheaper alternatives. This worsens inflation.
Inflation at 9-year-high
For the past few years, inflation in Bangladesh had been under control but it began to increase in 2021 and has now risen to 7.56% according to official accounts, though the actual rate is thought to be much higher. The prices of rice, wheat, edible oil and other essential commodities are increasing and the inflation rate has climbed to a nine-year-high.
Several studies indicate that low-income citizens are struggling to cope with the high prices of essential commodities and compromising on their food and nutrition.
The government recently hiked urea fertiliser and fuel oil prices without implementing measures to improve the management of the energy sector and reduce inefficiency and system loss.
Global supply and Bangladesh
ReplyDeleteMahtab Uddin Chowdhury | Published: 00:00, Sep 19,2022 | Updated: 23:21, Sep 18,2022
https://www.newagebd.net/article/181441/global-supply-and-bangladesh
According to the report, based on Dun & Bradstreet data, at least 374,000 businesses worldwide depend on Russian suppliers, while at least 241,000 businesses across the world rely on Ukrainian suppliers. As stated in Forbes magazine, ‘If the pandemic crippled the global supply chain, the war in Ukraine knocked it to its knees.’ The war generally destroys natural resources and creates enormous barriers to the market. This general tendency is manifested in the aftermath of the Russia-Ukraine war when commodity and oil prices saw an increase, global economic activities slowed down and inflation rate increased. Reportedly, the war reduced global GDP by about 1.5 per cent and led to a rise in global inflation of about 1.3 per cent.
Bangladesh’s post-pandemic economic recovery programme even before gaining momentum is at risk because of the Russia-Ukraine war. In terms of oil production, Russia ranks third in the world; hence high oil prices are hurting the entire economy. Bangladesh, an oil-importing nation, is already under strain from hefty import duties. Additionally, given that Russia is a significant market for Bangladesh’s ready-made garment products, global sanctions on Russia imply that Bangladesh’s trade with Russia will be impacted. In the last July–February, the revenue from exporting clothing to Russia was $482.23 million, or $60.15 on an average per month, but the revenue fell to $27.05 million in March–May 2022.
Furthermore, the high import dependency of Bangladesh has created a serious economic stagnation. Since Bangladesh primarily imports wheat from the Black Sea region, the price of wheat flour sharply increased. The government raised diesel prices by approximately 23 per cent in November 2021, which is already reflected in the high cost of transport and other necessities. Additionally, there has been a significant increase in the price of soybean oil.
All these things are causing the country’s inflation rate to be high, approximately 7.42 in May which is the highest in the last eight years. Let’s not forget the foreign debt that Bangladesh needs to pay back. At the end of fiscal 2020–21, Bangladesh’s external debt was $60.15 billion. However, the underlying concern is that, according to prominent economist Debapriya Bhattacharya, although Bangladesh’s external debt status is now in the green, it may move into the yellow zone by 2024–25.
Under this circumstances, Bangladesh is in dire need of taking some bold and dynamic steps to stabilise the economy. Bangladesh should look for alternative sources of importing goods. It’s essential to avoid being overly dependent on any one location or nation for specific products. In this context, the government of Bangladesh initiated some talks with Canada and some other countries.
The government has initiated these dialogue particularly after India stopped exporting its supply of wheat to Bangladesh. Similarly, Bangladesh needs to diversify its agricultural production to reduce import dependency. More research should be facilitated to encourage innovative approaches in this sector, particularly focusing on regularly imported products such as wheat, corn, and oilseed.
When it comes to talking about a better supply chain system, port management plays a vital role in Bangladesh or elsewhere. Based on a report by the World Bank and S&P Global Market Intelligence, the Chattogram port has been ranked as Asia’s least efficient trade hub for handling containers. Considering the low ranking, the government should focus more on improving the efficiency of the port management so that quick tracking and a better supply of goods can be ensured.
Prime Minister Sheikh Hasina said on Wednesday that her recent visit to India benefitted Bangladesh and she has not returned "empty handed" and emphasised that her trip has opened up a new horizon in the relationship between the two friendly neighbouring countries.
ReplyDeletehttps://www.business-standard.com/article/current-affairs/i-have-not-returned-empty-handed-from-india-bangladesh-pm-hasina-122091401249_1.html
During Hasina's visit, India and Bangladesh signed seven agreements, including one on sharing of waters of Kushiyara river which is expected to benefit the regions of southern Assam and Bangladesh's Sylhet region.
"They (India) have shown much sincerity and I have not returned empty handed," Hasina told reporters here, nearly after a week she returned home following a four-day visit to India from September 5 to 8.
"I think that my visit, after a long break of three years due to the Covid pandemic, has opened a new horizon in Bangladesh-India relations, she said, adding that the people of both sides would be benefited from the cooperation in all the areas identified during her India visit and the decisions taken to solve the existing bilateral problems.
Her comments came as leaders of the main opposition outside parliament BNP alleged that Bangladesh gained nothing from her India visit while its secretary general Mirza Fakhrul Islam Alamgir said, "Hasina is unable to deal with India".
Hasina said a MoU on the cross-border Kushiyara river was one of the major achievements of her tour as it was expected to protect over 5,820,000 hectares of land in Bangladesh's northeastern Sylhet region from sudden and protracted flooding.
She said that as per the MoU, Bangladesh would receive 153 cusecs of water under the Surma-Kushiyara project from the common river Kushiyara and as a result, 5,000 hectares of land would get irrigation facilities through Rahimpur Link Canal.
She said the water sharing issue of major Teesta also featured during her talks with Indian counterpart Narendra Modi while BNP chairperson and former prime minister Khaleda Zia even forgot to raise the long pending Ganges water issue during her New Delhi tour."
Bangladesh and India had signed the Ganges Treaty in 1996 during Hasina's ruling Awami League government.
She said the two countries reached an agreement on cooperation in the fields of environment, climate change, cyber security, space technology, and green economy, cultural and people-to-people communication.
"We agreed to complete the construction work of the second gate proposed by India at the Petrapol-Benapole border as soon as possible to expand trade. A delegation from Bangladesh will soon visit India to participate in the start-up fair," Hasina added.
Hasina said New Delhi agreed not to halt export of products like sugar, onion, garlic and ginger to Bangladesh without informing Dhaka in advance so Bangladesh could find alternative sources for those essentials.
She said that cessation of border killings, trade expansion, withdrawal of anti-dumping duty on Bangladesh jute products, repatriation of the Rohingyas, import of electricity from Nepal and Bhutan via India, were also discussed.
"After all, in the changed world situation, this visit would accelerate both the countries to move forward together in a new way, Hasina said.
She added that similarities of language and culture deepened the historic relations with our closest neighbour and friendly country, India.
"Apart from this, the support during the Liberation War and cooperation after the independence has reached this friendship at a special level, she added.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
BD to become a trillion dollar economy: BCG
ReplyDeletehttps://www.business-standard.com/article/international/bangladesh-seen-on-track-to-be-a-1-trillion-economy-by-2040-bcg-report-122112500526_1.html
Bangladesh is on course to become a $1 trillion economy by 2040, driven by consumer optimism, innovation in emerging economic sectors and a young engaged workforce, according to Boston Consulting Group.
With average annual growth of 6.4% between 2016 and 2021, the South Asian nation has outpaced peers such as India, Indonesia, Vietnam, the Philippines and Thailand, BCG wrote in a report released on Friday.
Bangladesh’s domestic consumer market is set to become the ninth-largest in the world. And a rapidly expanding middle and affluent class is projected to rise substantially between 2020 and 2025, the report said, with a robust gig economy propping up a workforce where the median age is just 28.
“The country could have easily been overshadowed by its neighbor to the northeast -- China -- or its continental cousin to the west -- India -- but in this region of economic powerhouses, Bangladesh stands tall,” BCG wrote.
Bangladesh progressed from a low-income to lower-middle-income country in 2015. Though that’s five years later than India, Bangladesh’s GDP per capita is already higher than its neighbor. The nation aims to become an upper-middle-income country by 2031.
Some challenges remain. Recent issues with liquidity, as well as foreign exchange and inflationary pressures, may slow growth in the short term, according to BCG. But Bangladesh has taken measures to position its $416 billion economy for a lucrative few decades, so long as it maintains an average growth rate of about 5%.
In a BCG survey analysis, 57% of respondents “continue to believe the next generation would have better lives than themselves, especially as the country transitions to a skill-based economy.”
“Though the economy faces some near-term volatility, we are confident that this highly resilient economy will continue to demonstrate robust growth in the long term,” the report said.
Informal Savings in Pakistan
ReplyDeletehttps://www.dawn.com/news/1725956
According to research by Oraan, around 41pc Pakistanis saved via committees (or Rosca), whereas Karandaaz puts that figure at 34pc. Assuming the informal economy accounts for roughly 30pc, as suggested by research from the Pakistan Institute of Developing Economics, it translates into annual committees of Rs4 trillion at base prices, using conservative inputs.
While this back-of-the-envelope calculation is far from scientific, it helps contextualise how big the informal savings market really is. Everyone from a widow looking to save up for her children’s education to young adults trying to save up for their marriage, committees are what they turn to.
This phenomenon is not exclusive to Pakistan. According to a note by Middle East Venture Partners (one of the investors in Bykea), “the global market is largely untapped and ripe for disruption with 2.4 billion people using money circles through traditional channels.”
They recently participated in the Egyptian digital committees’ startup MoneyFellows’ $31m Series B.
Apart from the traditional financial institutions’ general apathy towards the customer, committees appeal to an average Pakistani for several reasons: they are a community-based instrument with some level of flexibility and there is no interest involved.
Most importantly, it helps them manage cash flow better due to habitual change. For women, the product enjoys particular popularity since the former financial services are largely inaccessible.
However, since committees are primarily cash-based with virtually no money trail involved, it poses massive risks, as we saw recently when a girl, Sidra Humaid, who ran a network of committees through social media, defaulted on Rs420m of payments.
----
Even beyond this, committees have flaws by design, only amplified by Pakistan’s macros. For instance, the person receiving the first lump sum amount will always be at an advantage since their instalments in the subsequent months would be worth less due to both inflation and rupee depreciation. The recipient of the last payment would see the amount’s purchasing power eroded substantially by the time they get it.
Moreover, due to the community-based nature of the product, the risk of network defaulting is higher as people of usually similar risk profiles would be pooling in their money.
For example, if employees from an organisation have running office committees, delayed salaries or layoffs within the organisation would lead to a bad equilibrium, creating losses for the rest of the group, often resulting in default.
However, there are ways to address some of those challenges. First of all, to (partially) protect your lump sum from depreciation or devaluation, you can enter a committee with a duration of up to 10 months. Given Pakistan’s macros of late, you’d still lose money in real terms but to be fair, that’d most likely be the case in any other instrument as well, including the risk-free government papers.
In fact, contrary to popular perception, there are certain ways to further alleviate the inflation problem. Digital committees have an option of gamifying the experience by rewarding good payment behaviour through loyalty programs and/or brand partnerships to provide discounts on utilities-based services and products.
Secondly, digital committees help create a trail of money which, coupled with a centralised authority (the platform itself), brings in accountability and recourse in the event of a default. The receipt and/or ledger helps with basic accounting in committees creating transparency for people within the group.
The third benefit of digital committees is the security factor. The participant has to go through a know-your-customer and credit check process to make sure there is no fraudulent behaviour that could negatively impact the group, along with the participant’s ability and willingness to pay to create an overall environment for responsible finance.
Five Things to Know about the Informal Economy
ReplyDeletehttps://www.imf.org/en/News/Articles/2021/07/28/na-072821-five-things-to-know-about-the-informal-economy
The informal economy is a global and pervasive phenomenon. Some 60 percent of the world’s population participates in the informal sector. Although mostly prevalent in emerging and developing economies, it is also an important part of advanced economies.
The informal economy consists of activities that have market value but are not formally registered.
The informal economy embraces professions as diverse as minibus drivers in Africa, the market stands in Latin America, and the hawkers found at traffic lights all over the world. In advanced economies, examples can range from gig and construction workers, through domestic workers, to registered firms that engage in informal activities.
The International Labor Organization estimates that about 2 billion workers, or over 60 percent of the world’s adult labor force, operate in the informal sector--at least part time.
The informal economy is a global phenomenon, but there is great variation within and across countries. On average, it represents 35 percent of GDP in low- and middle- income countries versus 15 percent in advanced economies.
Latin America and sub-Saharan Africa have the highest levels of informality, and Europe and East Asia are the regions with the lowest levels of informality.
The informal economy is difficult to measure.
This is because activities within it cannot be directly observed, and for the most part, participants in the informal economy do not want to be accounted for.
But it is important to try and measure the size of the informal economy because of its significance, and also because it employs some of the world’s most vulnerable people.
Informality can be measured in two different ways. The direct approach is based on surveys, voluntary replies, and other compliance methods to directly measure the number of informal workers and firms.
Indirect methods focus on certain characteristics, or proxies, that can be observed and are related to informal economic activity. Examples of proxies include electricity consumption, night-light satellite data, and cash in circulation. Using these methods, the share of the informal economy in total output can be measured.
The COVID-19 pandemic hit informal workers particularly hard, especially women.
This uneven impact of the pandemic is because the majority of informal workers are employed in contact-intensive sectors (such as domestic workers, market vendors, and taxi drivers) and in insecure jobs that do not offer paid leave or the ability to work from home.
Close to 95 million more people—many of them informal workers--are estimated to have fallen below the threshold of extreme poverty in 2020 compared with pre-pandemic projections.
Gender inequality is also increasing as millions of women who are informal workers, have been forced to stop working since the start of the pandemic. For example, women make up 80 percent of domestic workers globally, and 72 percent of them have lost their jobs as a result of the pandemic.
In sub-Saharan Africa, 41 percent of women-owned businesses closed, compared with 34 percent of those owned by men.
The informal economy is central to the economic development process.
Understanding the drivers and consequences of informality is central to sustainable and inclusive development, as informality is critically related to how fast countries grow, and to poverty and inequality, including gender inequality. Whereas some individuals and firms operate informally by choice, 85 percent of all informal workers are in precarious employment, not through choice but due to a lack of opportunities in the formal sector. This has important economic consequences.
How Informal Sector Affects the Formal Economy in Pakistan? A Lesson for Developing Countries
ReplyDeletehttps://journals.sagepub.com/doi/full/10.1177/2277978719898975
There have been multiple estimates for the informal sector of Pakistan (Ahmed & Ahmed, 1995; Ahmed & Hussain, 2008; Arby et al., 2010; Aslam, 1998; Gulzar, Junaid, & Haider, 2010; Iqbal, Qureshi, & Mahmood, 1998; Kemal, 2003; Kemal, 2007; Kemal & Qasim, 2012; Kiani, Ahmed, & Zaman, 2015; Mughal, Schneider, & Hayat, 2018; Shabsigh, 1995; Yasmin & Rauf, 2003), yet most of the studies are limited to measuring the informal sector only. However, Shabsigh (1995) explored the relationship between fiscal deficit and informal sector, while Yasmin and Rauf (2003) and Kemal (2007) attempted to explore the nexus between informal and formal sectors. The estimates of the first author were based on simple ordinary least squares (OLS) without accounting for cointegration among variables. On the other hand, Kemal (2007) used vector autoregression (VAR), and his results showed unidirectional causality from informal sector to nominal GDP. Further, they used Johansen Cointegration test and Error correction model to conclude that shadow economy has a positive effect on the formal sector in short- as well as long run. We, however, argue that the effect of the informal sector on official economy may be of asymmetric in nature in the long and short run, emanating from two contrasting propositions:
1.
First, the informal sector, being more dynamic and extensive, is considered a safe haven for informal employment and production activities stemming from its capacity to avoid the bureaucracy and legalities. This may be supporting the economic activity in the long run when the income and savings from the informal sector are spent on consumption goods being produced by the formal economy. Furthermore, countries with relatively high incidence of poverty and weak social welfare institutions may use the informal sector as a substitute for social security.
2.
On the contrary, informality is a burden on exchequer, particularly when it comes to revenue collection in the short run; hence, it restrains the formal economic activity by raising the cost of being formal; that is, taxpayers have to bear the cost of tax evaders. Lower tax collection implies less expenditure on public utilities and lower productivity and economic growth.
The above contrasting propositions also seek strength from Khan, Khwaja, and Olken (2015) who used an experimental study on performance-based incentives to tax officials in Pakistan. Although they showed that the tax revenue increased, however, bribe requests also increased by 30 per cent, which depicts a clear burden on economic growth in the short run. Therefore, we hypothesize that the informal sector may affect the formal economy positively in the long run and negatively in the short run.
Top 10 countries with lowest energy consumption per capita
ReplyDeleteOutside Africa, Bangladesh, Pakistan and the Philippines stand out for low energy security
https://www.fdiintelligence.com/content/data-trends/top-10-countries-with-lowest-energy-consumption-per-capita-81642
Outside Africa, fast-growing Asia economies such as Bangladesh, Pakistan and the Philippines use the least primary energy per capita, according to the latest BP Statistical Review of World Energy.
People in East Africa, Central Africa and Western Africa use 4.7, 5.7 and 7.2 gigajoules of primary energy per capita per year, respectively, the review notes. Primary energy is that classed as an energy source that has not been subject to any human-engineered conversion processes.
While energy use in these regions matches typically subdued levels of economic development, that is not the case in Bangladesh, Pakistan and the Philippines — countries with few indigenous energy commodities where energy infrastructure has struggled to keep up with the accelerating economic growth of the past years.
Per capita energy consumption in Bangladesh stands at 9.9 gigajoules, BP data shows — the lowest of any country outside Africa. Pakistan consumes 17.1 gigajoules and the Philippines consumes 17.6 gigajoules. By contrast, the average for countries in the OECD is 167.9 gigajoules, while stands at 56.2 gigajoules in non-OECD countries.
Bangladesh has resorted to Russian technology and financing to build the country’s first nuclear plant and thus limit the country’s recurrent power outages, while Pakistan, which already has six nuclear power plants in operation, has been developing liquified natural gas terminals to bump up imports of LNG.
After Sri Lanka, with 17.8 gigajoules, and the Southern Africa region (excluding South Africa) with 23.5 gigajoules, the top 10 is rounded out by two other emerging economic powerhouses — India and Morocco.
India, with 23.3 gigajoules per capita, continues to generate most of the primary energy it through coal and oil. The country is the world’s second-largest consumer of coal after China, although its first renewable energy generation has also come online in the past few years.
Morocco, with 25.6 gigajoules per capita, gets most of its primary energy from oil, although the country boasts the world’s biggest thermal solar power plant, and its renewable energy potential is now being assessed for major cross-border energy generation projects.
SDG Index 2023: Bangladesh ahead of India, Pakistan
ReplyDeletehttps://www.tbsnews.net/economy/sdg-index-2023-bangladesh-ahead-india-pakistan-654006
Bangladesh has ranked 101st on the Sustainable Development Report 2023, with an overall score of 65.9 out of 100.
In this year's index, Bangladesh is ahead of India (112th), Pakistan (128th), and Afghanistan (158th) in South Asia.
The Sustainable Development Report 2023 including the SDG Index and Dashboards, which was released on Wednesday, is a complement to the official SDG indicators and the voluntary national reviews, published by the Dublin University Press.
The report assesses the progress of all of the 193 UN Member States towards the SDGs.
Status of SDG targets for Bangladesh
Around 30.9% of the SDG targets for Bangladesh have been achieved or on track, 41.2% have limited progress, and 27.9% have been worsening.
The SDG dashboard highlighted that out of 17 development goals, Bangladesh is on track or maintaining SDG achievements for only two goals – Quality education (SDG 4), and Responsible consumption and production (SDG 12).
Besides, the country has been moderately improving with respect to achieving six goals: no poverty (SDG 1), zero hunger (SDG 2), good health and well-being (SDG 3), clean water and sanitation (SDG 6), affordable and clean energy (SDG 7), and industry, innovation and infrastructure (SDG 9).
Bangladesh is moderately improving in these six indicators, but they are not sufficient as there are major challenges in achieving these goals.
The SDG dashboard indicates that Bangladesh has already achieved two goals – responsible consumption and production (SDG 12), and climate action (SDG 13).
Although the country has achieved the climate action goal, it has been tagged to take urgent action to combat climate change and its impacts.
Sadly, the country is stagnant in its position for four goals, and moving backward with respect to three goals, according to the report.
There are major challenges in achieving the targets related to life below water (SDG14), life on land (SDG15), and peace, justice and strong institutions (SDG16), reflected by the decreasing scores in these indicators.
There is no data about one of the goals – reduced inequalities (SDG 10) – for Bangladesh and overall 2% of data is missing in the SDG Index.
Spillover Index
The report also published a spillover index, which indicates transboundary impacts generated by one country on others.
Bangladesh ranked 46th with a score of 97.8 on the Spillover Index, indicating the country has significantly more positive and fewer negative impacts on other countries in achieving their sustainable development goals.
The Spillover Index assesses such spillovers along three dimensions: environmental and social impacts embodied in trade, economy and finance, and security.
Global situation
Globally, Finland topped the SDG Index by replacing Sweden. Denmark ranked third, followed by Germany and Austria.
South Sudan, Central African Republic, and Chad are the bottom three countries.
All of the SDGs are seriously off track.
From 2015 to 2019, the world made some progress on the SDGs, although this was already vastly insufficient to achieve the goals. Since the outbreak of the pandemic in 2020 and other simultaneous crises, SDG progress has stalled globally.
The disruptions caused by these multiple crises have aggravated fiscal-space issues in low-income countries and in lower-middle income countries, leading to a reversal in progress on several goals and indicators.
"Despite this alarming development, the SDGs are still achievable. None of their objectives are beyond our reach," said the report.
Sheikh Hasina: Euphoria in Bangladesh after PM flees to India
ReplyDeletehttps://www.bbc.com/news/articles/clywww69p2vo
Bangladeshi Prime Minister Sheikh Hasina has resigned after weeks of deadly anti-government protests, putting an end to her more than two decades dominating the country's politics.
Ms Hasina, 76, fled the country, reportedly landing in India on Monday.
Jubilant crowds took to the streets to celebrate the news, with some storming the prime ministerial palace, reportedly looting and vandalising parts of her former residence.
Hours after Ms Hasina's resignation, President Mohammed Shahabuddin ordered the release of jailed former prime minister Khaleda Zia and all students detained during recent protests against a quota system for government jobs.
President Shahabuddin said he had chaired a meeting of army chiefs and political representatives.
He said an interim government would be formed, new elections called and a national curfew lifted.
In Dhaka on Monday, police and other government buildings were attacked and set on fire. Protesters attempted to tear down a statue of independence leader Sheikh Mujibur Rahman, Ms Hasina's father.
Army and police units were deployed across the city. Mobile phone service was reportedly cut off for several hours before being restored.
On Monday, protesters were seen carrying out furniture from the prime minister's residence.
Dozens were reported killed on Monday, although the precise toll remained unclear. The AFP news agency reported the toll as 66 dead, though local outlet the Dhaka Tribune said as many as 135 had been killed.
Ms Hasina's departure leaves a vacuum in Bangladeshi politics, which has long been characterised by a rivalry between her Awami League and the Bangladesh Nationalist Party.
The country has experienced several military coups, most recently in 2007.
The US commended the army for its "restraint" and said an interim government should be formed. The EU urged an "orderly and peaceful transition" towards a democratically elected government.
There was no official reaction from neighbour and regional power India.