A sharp decline in the industrial sector’s contribution to the gross domestic product (GDP) caused the FY23 GDP growth to drop to 6.03 per cent.
The GDP growth is 0.47 percentage points lower than the government’s budgetary target of 6.5 per cent, according to the Bangladesh Bureau of Statistics (BBS) provisional data revealed on Tuesday.
The fall in the industrial sector’s contribution was much higher compared to that of the agriculture and service sectors.
According to the data, the industrial sector’s FY23 growth was 8.18 per cent, which was 1.68 percentage points lower than FY22.
The agriculture sector’s growth declined to 2.61 per cent in the current financial year from 3.05 per cent in FY22. Besides, the service sector’s growth fell to 5.84 per cent from 6.26 per cent in FY22.
A senior official of the BBS told The Business Post that GDP growth declined in FY23 due to the drop in the contribution of all three sectors – agriculture, industry, and services.
The country’s per capita income also declined to $2,765 in FY23. The per capita income of the 2021-22 fiscal year was $2,793 while the GDP growth was 7.1 per cent, as per the final BBS report for that year.
Meanwhile, 8 per cent GDP growth was projected for FY23 in the government’s 8th Five Year plan.
The BBS data revealed that the total GDP size for FY23 is $453 billion. Bangladesh’s GDP size in FY22 was $460 billion.
According to the Bangladesh Development Update April 2023 by the World Bank, the country’s GDP growth will be 5.2 per cent in FY23. The IMF recently forecast Bangladesh’s FY23 economic growth at 5.5 per cent.
This lower projection was influenced by factors such as elevated inflation, tighter financial conditions, disruptive import restrictions, and global economic uncertainty.
In line with these, the Asian Development Bank also reported last month that Bangladesh’s GDP will grow to 5.3 per cent in FY23.
In FY21, the GDP growth was 6.94 per cent, which was 3.45 per cent in FY20 and 7.88 per cent in FY19, the BBS data shows.
Former lead economist of the World Bank’s Dhaka Office Dr Zahid Hussain told The Business Post that GDP growth and per capita income have gone down due to the dollar crisis and the increase in fuel prices, which hit all sectors of the economy hard.
“Another reason is the fall in the contribution of agriculture, industry, and services,” he said, adding that the fall in per capita income to $2,765 along with a 6.03 per cent GDP growth means the purchasing power of households has declined.
“The decline in both investment and import impacted the service sector, which accounts for the largest share of the economy. As a result, both GDP growth and per capita income fell,” Zahid added.
“Besides, the fall in the service sector had impacts on the two others – industry and agriculture,” the economist further said.
The GDP growth and per capita income were estimated as per the 2015-16 base year, according to the BBS.
The total GDP for FY21 was calculated at $416 billion while the per capita income was $2,591.
The GDP growth was down to a 30-year low of 3.45 per cent in the fiscal year 2019-20 due to Covid-19 fallouts while per capita income was $2,326, said BBS.
In FY19, per capita income was $2,209 while the GDP growth was 7.88 per cent. In the 2017-18 fiscal year, per capita income was $2,043 while the GDP growth rate was 7.32 per cent.
Per capita income was $1,879 while the GDP growth rate was 6.59 per cent in the 2016-17 fiscal year.