South Asian Network on Economic Modeling (SANEM), a non-profit research organisation, today termed the recent economic growth of Bangladesh as “puzzling”, saying that the GDP growth mismatched with the data and various indicators of the economy.

Claiming that export and remittance are the primary drivers for economic growth, the SANEM said the economic growth rates in recent years do not match with the fluctuations in the export and remittance flow.

It said the government data showed surge in private consumption in the last two fiscal years -- 2016-17 and 2017-18 – although export and remittance growth were in the lower state.

“Private consumption growth was not too high in the past years. Why did private consumption growth record such a sharp increase? Public consumption growth can be explained to some extent because the government is spending. Private consumption growth is a puzzle,” said SANEM Executive Director Selim Raihan at the BRAC Centre Inn in Dhaka.

SANEM, citing Bangladesh Bureau of Statistics (BBS) and other data, said private consumption growth was estimated at 11.41 per cent in fiscal year 2017-18 from 7.43 percent the previous year.

Private consumption growth was 3 percent in fiscal year 2015-16, it said.

“This is a big concern that we see the high private consumption growth despite low export and remittance growth. Second concern is that we see high manufacturing growth despite low export growth and slow private investment,” said Raihan, also professor of Economics at University of Dhaka.

SANEM said domestic demand can become a growth driver with sizeable improvement in the per capita income, but in that case overall growth rate may fall. Domestic demand cannot be a growth driver in a low-income country like Bangladesh, said Raihan.

The research organisation came up with the observation after two weeks after the Centre for Policy Dialogue (CPD), private think tank, questioned the current year's growth estimated of 8.13 percent, citing incoherency in various indicators of the economy.

SANEM also questioned high manufacturing growth rate at 13.4 percent in fiscal year 2017-18, although export growth was 5.81 percent in that year when the private investment growth was also slow.

The private research organisation said high manufacturing growth data does not match with poor business environment.

It mentioned Bangladesh’s falling rankings in World Bank’s Doing Business and Logistics Performance Index between 2016 and 2018.

“We don’t see any major improvement in business environment. Rather, we see deterioration in some areas. Then how could we explain manufacturing growth. All these led to a very puzzling scenario,” said Selim.