Making sense of national statistics

Do we live in a land of paradoxes or inexplicable achievements? This cannot just be a matter of interpretation or a case of being in the eyes of the beholder.

I am talking about recent data on life expectancy, adult literacy, and economic growth.

It could be a matter of interpretation if it were a legal issue and in the eyes of the beholder if it had anything to do with beauty.

None of the above.

Life expectancy and adult literacy

The Bangladesh Bureau of Statistics (BBS) has reported that life expectancy increased by two months and the adult literacy rate by 0.9 percentage points in 2020. Mind you they also said that the crude death rate increased while the infant mortality rate is unchanged. And we know educational institutions and adult literacy programmes have remained closed since March 2020.

It is possible for life expectancy to increase despite an increase in crude death rate and without decrease in infant mortality rate. Mathematically speaking.

Is it plausible? With a growing young population in which the share of the low death rate cohorts in the total population is rising, yes perhaps. Could that have swamped the effect of the rise in the crude death rate? Your guess is as good as mine.

Is it probable? That depends on whether survival probabilities can increase in most adolescent and adult ages in a pandemic year. A daunting puzzle for epidemiologists to fathom!

All we know is life expectancy in high income countries decreased in 2020. An increase in life expectancy has not been reported anywhere (to the best of my knowledge) except in Bangladesh the day before yesterday. There have been reports all over the world that the coronavirus disease has led to a drop in life expectancy because the pandemic has led to the neglect of other diseases and consequently rise in mortality and morbidity.

A 0.9 percentage point increase in adult literacy implies an additional 1.5 million adults gained literacy. Where from? Only the BBS can explain. You could argue this may have happened because the pandemic made people sheltered at home. They had time for self-literacy. But the sheltered most likely were already literate. Those without literacy are also the ones not able to afford shelter at home because of the demands of their day-to-day livelihoods. Nor are they capable of self-literacy.

GDP growth

The finance ministry claims GDP growth was 6 plus percent in FY21. Establishment economists nod and applaud. The former say it shows the resilience of the economy which in turn comes from the indomitable aspirations of our workers and farmers. No doubt about the latter. However, if aspiration is all that mattered to get one of the highest GDP growth in the world in a pandemic year, all you would need to keep growth resilient to shocks is a bunch of motivational speakers to fertilise aspirations.

Are we the only country with such indomitable aspirations? Aspirations in the presence of conditions inhibiting, not to speak of supporting, perspirations (read investment) and inspiration (read innovation) can only translate into boxes of wishes without cigars.

The large business community, not all by any means, miss no opportunity to shower praise for the reported growth rate. Yet ask them to keep their establishments closed for a week or two so that the virus can be tamed, all hell breaks loose. They clamour, "How will we pay our workers, utility bills, and repay loans?"

One cannot help but wonder who then appropriated the 6.1% growth? We are talking billions of dollars! Certainly not the government nor the workers or the farmers. We do not need to dig too deep to sense a data anomaly here. Just take a good look at tax collections and multifarious survey data on employment, wages, and farm incomes.

Remittances, reserves, and policy support

What about rising reserves and record formal remittance inflows? Don't they mean anything in this context? Of course, they do.

There is hardly any question on the credibility of these data. There may be questions about what has underpinned these inflows. More remittances from migrant workers abroad crossed the border in hard currency for sure. In normal times, these dollars liquidity would have been spent to pay for import of machinery, technology, and intermediate inputs.

These are not normal times. International trade is not back to pre-pandemic normal, for us anyway, human mobility and assembly is subject to unprecedented health risk volatility. Real import growth remains below normal and credit growth has slowed without any break. Foreign aid disbursements have been robust. More generally, our foreign borrowings exceeded settlement of financial obligations leading to increased surplus in the external financial flows.

Thus, reserve increases reflect some regaining of lost grounds in merchandise exports, weak recovery in real imports, surge in formal remittances and larger net financial surplus in the balance of payments. Reserves are liquid financial assets that comfort the creditors, keep calm in financial markets, and provide insurance against unforeseen expenditures and contingent liabilities. Unlike physical and human assets, reserves do not directly produce any GDP.

Remittances stimulate domestic demand. But then why haven't real imports – a robust indicator of domestic demand – picked up even close to the remittance surge? My hypothesis is that the $6 plus billion increases in remittances was only a partial offset to the decline in income from domestic activities at the low middle income household level due to the pandemic. And this too assumes the remittance surge came with full additionality.

Consequently, there was a net drag on domestic demand resulting from the direct and indirect effects of the pandemic.

What about the monetary and fiscal stimulus? These were helpful as placeholders for those who benefited, by their own admission. Or else what is the rationale for keeping them as seems to be the popular demand from economists and non-economists alike? Moreover, a large employment intensive segment remained excluded from the stimulus outreach, thus getting no chance to contribute to growth creation.

What is the fuss?

Data incoherence is not good even when it does not really matter to the public. It calls into question the integrity and ethics of the agency and makes life difficult for the entire data using community. Some of the data problems are due to bad data gathering systems, some of them are due to wrong specifications, and some are often simplistic assumptions. There is also the practice of inventing data to fit a preconceived trend.

Perhaps all the above are at work – or better yet, none of the above is true. As you stay confined at home during this weeklong presumably "hard lockdown", try to make sense of this data. If you do, you would have made a small contribution to redeem statistics from the centuries old curse of Mark Twain and his followers!