Economy in the rearview mirror | The Business Standard
Skip to main content
  • Latest
  • Economy
    • Banking
    • Stocks
    • Industry
    • Analysis
    • Bazaar
    • RMG
    • Corporates
    • Aviation
  • Videos
    • TBS Today
    • TBS Stories
    • TBS World
    • News of the day
    • TBS Programs
    • Podcast
    • Editor's Pick
  • World+Biz
  • Features
    • Panorama
    • The Big Picture
    • Pursuit
    • Habitat
    • Thoughts
    • Splash
    • Mode
    • Tech
    • Explorer
    • Brands
    • In Focus
    • Book Review
    • Earth
    • Food
    • Luxury
    • Wheels
  • Subscribe
    • Epaper
    • GOVT. Ad
  • More
    • Sports
    • TBS Graduates
    • Bangladesh
    • Supplement
    • Infograph
    • Archive
    • Gallery
    • Long Read
    • Interviews
    • Offbeat
    • Magazine
    • Climate Change
    • Health
    • Cartoons
  • বাংলা
The Business Standard

Tuesday
July 15, 2025

Sign In
Subscribe
  • Latest
  • Economy
    • Banking
    • Stocks
    • Industry
    • Analysis
    • Bazaar
    • RMG
    • Corporates
    • Aviation
  • Videos
    • TBS Today
    • TBS Stories
    • TBS World
    • News of the day
    • TBS Programs
    • Podcast
    • Editor's Pick
  • World+Biz
  • Features
    • Panorama
    • The Big Picture
    • Pursuit
    • Habitat
    • Thoughts
    • Splash
    • Mode
    • Tech
    • Explorer
    • Brands
    • In Focus
    • Book Review
    • Earth
    • Food
    • Luxury
    • Wheels
  • Subscribe
    • Epaper
    • GOVT. Ad
  • More
    • Sports
    • TBS Graduates
    • Bangladesh
    • Supplement
    • Infograph
    • Archive
    • Gallery
    • Long Read
    • Interviews
    • Offbeat
    • Magazine
    • Climate Change
    • Health
    • Cartoons
  • বাংলা
TUESDAY, JULY 15, 2025
Economy in the rearview mirror

Thoughts

Jyoti Rahman
25 August, 2021, 10:05 am
Last modified: 25 August, 2021, 10:54 am

Related News

  • UK economy shrinks again in May, raising new worries over outlook
  • Bangladesh’s economic expansion slows in June as growth weakens in key sector: PMI
  • Actual impact will depend on how US retailers respond: Mostafa Abid Khan
  • GDP grows 4.86% in Jan-Mar of FY25
  • The economy in FY25: Battling challenging times

Economy in the rearview mirror

Investigating the reliability of GDP growth estimated during the pre-pandemic era and evaluating progress in the recovery period

Jyoti Rahman
25 August, 2021, 10:05 am
Last modified: 25 August, 2021, 10:54 am
Jyoti Rahman. Illustration: TBS
Jyoti Rahman. Illustration: TBS

The Covid-19 pandemic and associated lockdowns have posed a serious challenge to economic bean counters around the world, who had very little experience to model how the economy would evolve during the pandemic. So it was little surprise that the economic indicators across the world had been swinging violently, seesawing between sharp contractions and rapid recoveries. 

More surprising were the initial official estimates that had the real GDP in Bangladesh growing at 5-6% in the two pandemic-hit financial years. That is, the official figures painted a pace of growth that was commonplace not that many years ago, even if the numbers were inconsistent with the lived realities of households and businesses alike. 

Further, the official GDP figures were inconsistent with the partial indicators, also published by the government, that showed a sharp economic slowdown after March 2020. 

The Business Standard Google News Keep updated, follow The Business Standard's Google news channel

The latest Bangladesh Bureau of Statistics national accounts figures are more credible, showing that the economy was indeed hit hard by the pandemic (Chart 1), with real GDP growth slowing down to its weakest rate since 1990-91 —a year beset by the fallouts of the first Gulf War and the democratic uprising against the regime of Lt Gen HM Ershad. 

Further, the economy is yet to recover to pre-pandemic trends. In the five years to 2018-19, the economy was growing on average by 7% a year. The economy in 2020-21 was still 4.6% smaller than the level that would have been achieved had that trend continued. 

Of course, there have been questions about the reliability of the pre-pandemic GDP figures, which the BBS has not revised. For example, the same partial indicators that have been used to challenge the initial estimates of the pandemic era GDP figures can be used to analyse the economic growth of the past decade. In what follows, we will attempt something simpler, looking mainly at the national accounts that underpin the growth numbers to understand the economy before the pandemic. 

Let's first consider the production side of the national accounts. This measure counts the real value (that is, after accounting for inflation) of all the goods and services that have been produced in an economy in a given year. Chart 2 shows the contribution made by three sectors — primary, industry, and services— to the aggregate economic growth. 

Chart 2: Contribution to GDP(P) growth

Source: CEIC Asia database. Financial years ending on 30 June.

We can immediately make a few observations. The primary sector —agriculture and fisheries — have been relatively stable over the years. Industry, on the other hand, drove the high growth rate in the half-decade preceding the pandemic. And both the industry and services sectors were buffeted by the pandemic, though it appears that the services sector has staged a stronger recovery.

Let's explore these two sectors in a bit more detail.  

The industry sector comprises mining, utilities, manufacturing, and construction. Manufacturing accounts for about two-thirds of the sector's production, with construction adding nearly another quarter. Chart 3 shows that both the pre-Covid boom in industry growth and the sharp slowdown during the pandemic are driven by manufacturing.  

Chart 3: Industry sector growth

Source: CEIC Asia database. Financial years end on 30 June.

Turning to the services sector, Chart 4 shows that retail and wholesale trade, hotels and restaurants, transport and communications, and finances were the worst affected ones in 2019-20, with all but finances staging a recovery in 2020-21. 

Chart 4: Services sector growth

Source: CEIC Asia database. Financial years end on 30 June.

How do the above numbers stack up against what we know about the economy in recent years? 

To the extent that most of Bangladesh's manufacturing is exports-oriented, the timing of the manufacturing surge makes sense — the world economy was booming in 2018, with unemployment rates reaching decades low in many western economies, before softening due to the trade wars and policy uncertainties before the pandemic. 

Turning to the services in 2019-20, trade, tourism and transport services were clearly the ones most affected by the lockdown. These too, then appear sensible. In the context of the general economic malaise, it's not hard to understand the lack of recovery in finances. 

That is, the production side of the economy tells a tale of an exports-driven manufacturing boom and bust plus the locked-down domestic services. 

Production is, of course, only one side of an economy. Everything that is produced must be demanded by someone —classified in the expenditure side of the national accounts into demand from external (net exports), public, corporate (private investment), and household (private consumption) sectors. A considerably more complicated picture emerges when we look at the contribution to growth from these sources. 

Consider the contribution of net exports to real GDP growth. In 2016-17 and 2017-18, when manufacturing was booming on the back of exports demand, net exports made a negative contribution to growth. Meanwhile, in 2020-21, with manufacturing yet to recover fully, net exports made a positive contribution to growth. 

Chart 5 resolves this apparent contradiction. It turns out, exports did grow strongly prior to the pandemic and is yet to recover. However, imports growth outpaced exports in 2016-17 and 2017-18, before turning sluggish even before the pandemic, with no recovery as of 2020-21. 

Chart 5: Exports and Imports growth

Source: CEIC Asia database. Financial years end on 30 June.

What has been driving the import growth? 

In addition to being used as intermediate inputs for export items, imported machinery and capital equipment are used by businesses or in public investment projects. 

Private investment growth has detracted over the past two years, thanks to the pandemic. Before that, private investment made a consistently strong contribution to economic growth. This means, the 2017-18 imports boom and the pre-pandemic softening are not likely to be caused by developments in the corporate sector.

Public demand and private consumption offer more promising answers. There indeed was an increase in public demand growth —both of public consumption and public investment —in 2016-17 and 2017-18 (Chart 6). This is also consistent with the strong growth in government production in those two years, shown in Chart 4 above. 

Chart 6: Public demand growth

Source: CEIC Asia database. Financial years ending on 30 June.

Meanwhile, according to the BBS, private consumption grew a whopping 11% in 2017-18, after growing by over 7% the previous years. Then it slumped to less than 4% growth in 2018-19, and has clocked about 5% a year in the two latest years. That is, the boom of the pre-pandemic import matches the consumption pattern. 

Taken together, might we surmise this story: in addition to an exports-driven manufacturing boom, a fiscal expansion in the run-up to the 2018 election led to an import binge, and we were witnessing its hangover unfold in 2019, well before the pandemic struck.

Poring through the fiscal accounts, the balance of payments, and banking sector data would help get a more definitive answer. That is for another time. For now, let's note that the BBS national accounts are, at least, internally consistent. 

Estimating economic data in a rapidly changing society is difficult even at the best of times. This is particularly so at times of unprecedented crises such as the pandemic. Willfully distorting data to hide bad news is akin to turning off headlights on a foggy highway. It's great that the BBS has stopped doing so.


Jyoti Rahman is an applied macroeconomist. His analyses are available at jrahman.wordpress.com


Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinions and views of The Business Standard.

Top News

Economy / Economy of Bangladesh / Economy News / GDP / Economy review / Bangladesh Economy

Comments

While most comments will be posted if they are on-topic and not abusive, moderation decisions are subjective. Published comments are readers’ own views and The Business Standard does not endorse any of the readers’ comments.

Top Stories

  • A file photo of Finance Adviser Saluhuddin Ahmed speaking at a press conference at Osmani Auditorium in the capital on 3 June. Photo: Rajib Dhar/TBS
    Govt to review independent power plants contracts signed under AL rule: Finance adviser
  • People enter and loot Ganobhaban, the Prime Minister’s residence, following the resignation of Sheikh Hasina in Dhaka, Bangladesh, on August 5, 2024. Photo: TBS
    Govt to spend Tk111 crore to transform Ganobhaban into 'July Uprising Memorial Museum'
  • NCC Vice Chairman Ali Riaz and others at the 14th day of the second round of National Consensus Commission dialogues at the Foreign Service Academy in Dhaka on Tuesday. Photo: TBS
    Consensus breach will be a shared failure, not just commission's: Ali Riaz

MOST VIEWED

  • Graphics: TBS
    Bangladesh Bank buys $171m at higher rate in first-ever auction
  • Representational image. Photo: Mohammad Minhaj Uddin/TBS
    Navy-run Dry Dock takeover boosts Ctg Port container handling, daily avg up 7%
  • From fuels to fruits, imports slump on depressed demand
    From fuels to fruits, imports slump on depressed demand
  • Bank Asia auctions assets of Partex Coal to recoup Tk100cr in defaulted loans
    Bank Asia auctions assets of Partex Coal to recoup Tk100cr in defaulted loans
  • Infographic: TBS
    Govt to set six conditions to prevent delays, waste in foreign-funded projects
  • Sanju Baraik. Photo: Collected
    DU student dies after falling from Jagannath Hall rooftop

Related News

  • UK economy shrinks again in May, raising new worries over outlook
  • Bangladesh’s economic expansion slows in June as growth weakens in key sector: PMI
  • Actual impact will depend on how US retailers respond: Mostafa Abid Khan
  • GDP grows 4.86% in Jan-Mar of FY25
  • The economy in FY25: Battling challenging times

Features

Illustration: TBS

Open source legal advice: How Facebook groups are empowering victims of land disputes

16h | Panorama
DU students at TSC around 12:45am on 15 July 2024, protesting Sheikh Hasina’s insulting remark. Photo: TBS

‘Razakar’: The butterfly effect of a word

1d | Panorama
Photo: Collected

Grooming gadgets: Where sleek tools meet effortless styles

1d | Brands
The 2020 Harrier's Porsche Cayenne coupe-like rear roofline, integrated LED lighting with the Modellista special bodykit all around, and a swanky front grille scream OEM Plus for the sophisticated enthusiast looking for a bigger family car that isn’t boring. PHOTO: Ahbaar Mohammad

2020 Toyota Harrier Hybrid: The Japanese Macan

2d | Wheels

More Videos from TBS

India visa complications, where to get advanced medical treatment

India visa complications, where to get advanced medical treatment

1h | Others
Firearm license and renewal fees doubled

Firearm license and renewal fees doubled

4h | TBS Stories
"New Look of Clothing at Chattogram's Zahur Hawkers' Market"

"New Look of Clothing at Chattogram's Zahur Hawkers' Market"

6h | TBS Stories
Will Patriot missile defense save Ukraine?

Will Patriot missile defense save Ukraine?

17h | Others
EMAIL US
contact@tbsnews.net
FOLLOW US
WHATSAPP
+880 1847416158
The Business Standard
  • About Us
  • Contact us
  • Sitemap
  • Advertisement
  • Privacy Policy
  • Comment Policy
Copyright © 2025
The Business Standard All rights reserved
Technical Partner: RSI Lab

Contact Us

The Business Standard

Main Office -4/A, Eskaton Garden, Dhaka- 1000

Phone: +8801847 416158 - 59

Send Opinion articles to - oped.tbs@gmail.com

For advertisement- sales@tbsnews.net