We need humility, not pride, to turn the economy around

The economy seems to be at a crossroads. For various reasons, the common belief people had about it in the pre-pandemic era has been replaced by fears. It is clear that the majority is increasingly struggling while the privileged few, sitting in their lofty palaces, continue to enjoy a larger and larger share of the benefits of „development”.

At the national level, the concern is that economic growth is slowing down and economic growth is slowing down. On April 2, the World Bank forecast Bangladesh’s real GDP growth at 5.6 percent in the current fiscal year and 5.7 percent next year, lower than the average annual growth rate of 6.6 percent in the decade before the outbreak of Covid-19. -19 pandemic. Similarly, the IMF, for the second time, in its World Economic Outlook released on April 16, lowered Bangladesh’s growth forecast for the current fiscal year to 5.7 percent.

On May 20, Bangladesh Bureau of Statistics (BPS) released its time table. As predicted, the economy grew 5.82 percent For the outgoing fiscal year, this is much lower than the revised estimate of 7.5 percent made in the budget speech for FY24 and 6.54 percent made at a coordination committee meeting in December. by the World Bank and the IMF.

This raises a very important question: Why were the government’s projections so far off? If the World Bank and International Monetary Fund can come up with relatively accurate estimates, why can’t it? Because government officials often refuse to accept data presented by reputable companies—without presenting their own evidence to counter it—it’s time for officials to get off their high horses, especially in light of their own poor records. With proper ratings.

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Be that as it may, some economists have questioned even the BBS projection of 5.82 percent GDP growth. They have done so on the basis that there is now no „positive indicator” that can be explained – one that summarizes how the economy is currently performing.

For example, while the BBS data showed that the agriculture sector recorded growth this year similar to last year, the industry sector, which accounted for one-third of the country’s GDP, grew at 6.6 per cent in FY24 compared to 8.37 per cent in FY23. . Imports of industrial raw materials and machinery were largely affected by the dollar crisis and rising energy prices significantly increased industrial production costs for businesses.

Unfortunately, some policy measures had to be taken to control inflation, which negatively affected growth. However, according to a survey conducted by the Center for Policy Dialogue in association with the World Economic Forum (WEF), 67.6 percent of respondents cited high levels of corruption as another major problem factor in doing business. Therefore, the government should have placed more emphasis on reducing corruption and corruption, which would automatically improve our business environment and give businesses a huge boost—and encourage more businesses to set up.

Meanwhile, persistent inflation is weighing on private consumption growth, and the World Bank expects investor sentiment in Bangladesh to weaken, coupled with rising interest rates and financial sector vulnerabilities. Consequently, it believes that an efficient resolution framework for non-performing loans (NPLs) is urgently needed. However, since most of our banking sector problems are tied to political ideology in one way or another, the government has so far shown no sign of mustering the political will or courage to address them.

According to another World Bank, declining private investment growth has become a regional problem Report. And it is also true that South Asia as a whole is not creating enough jobs to keep up with its rapidly growing working-age population. For Bangladesh, this has become a particularly acute problem, and as a result, the country has failed to capitalize on its demographic dividend.

On the other hand, even among those with jobs, the majority have seen their wage growth significantly below the rate of inflation for more than two years. Indeed, according to BBS figures, wage growth was below the rate of inflation for the 26th consecutive month in March.

A combination of these factors has prompted some to ask whether Bangladesh is entering a state of stagnation – a phenomenon that combines slow growth, high unemployment and inflation. But with the economy still growing at a slow rate and unemployment not yet high, that seems a bit premature — even if the official unemployment figures are too good to be true.

However, the cost of living crisis is a serious problem that severely reduces the quality of life for most people. According to the World Bank, the erosion of purchasing power has already pushed around five lakh people into extreme poverty between FY2022-23 and FY2023-24. And unless things turn around quickly – which seems highly unlikely – poverty will continue to rise and people’s disposable incomes will continue to fall.

Amidst all this, BBS data shows that per capita income has increased slightly over last year $2,784 In the current financial year. Does that mean Bangladeshi people are now economically advanced? Absolutely not. Per capita income is clearly skewed by the super-rich – acting as outliers. As media reports show, many of them are now holding or occupying government offices at various levels.

Amidst their growing wealth, most policy makers and politicians are oblivious to the ongoing economic suffering of the masses, which is another reason why its policies have been inadequate in addressing the crisis. In fact, many government policies these days are not made with the intention of mitigating the current crisis, but rather to continue to fill the pockets of vested interests, at the expense of the majority and the overall economy of the country.

In other words, the rich and powerful are slowly killing the golden goose they have/benefit from. As it continues, two things may happen simultaneously: i) social unrest may grow along with the suffering of the masses; and ii) oligarchs may reduce the share of fighting advantages, leading to more infighting. Since both of these factors could further destabilize the economy, one would hope that common sense (even over the oligarch’s self-interest) would prevail before we reach that fatal tipping point – but how wise is it to expect from a place where humility is all there is. Was it proud?

Eresh Omar Jamal He is the Vice President of Editorial and Opinion at The Daily Star. His X handle is: @EreshOmarJamal

The views expressed in this article are the author’s own.

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