Bangladesh not utilising growth potential: experts
Bangladesh has the potential to register close to 8 percent economic growth but is performing below its potential, economists said.
“Policy gaps should be addressed to fill out the growth gap,” said Biru Paksha Paul, visiting fellow of the Bangladesh Institute of Development Studies (BIDS).
He was presenting a paper -- Estimating Potential Growth for Bangladesh: A Production Function Approach -- co-authored by BIDS Research Associate Rizwana Islam at a seminar at the think-tank's office in the capital, said a press release.
The paper reinforces a view shared by many economists in the past that Bangladesh can't realise its full potential for various factors including infrastructure bottlenecks. Bangladesh's gross domestic product (GDP) grew 7.24 percent in fiscal 2016-17, up from 7.11 percent the previous year, according to the Bangladesh Bureau of Statistics (BBS).
Paul, a former chief economist of the Bangladesh Bank, said economic reforms and liberalisation propagated potential growth since the mid-1990s. However, the potential growth showed a decelerating trend since the early 2010s, he said.
The paper said knowing the growth potential was important, otherwise it would leave policymakers blind.
“All developed countries make great efforts to find the correct level of potential output. Developing countries often fail to estimate it correctly due to data paucity or low quality data. Bangladesh aspires to accelerate growth, but whether we are performing above or below the potential level is a big question,” reads the paper.
Paul said fiscal and monetary policies along with other long-term ones should consider potential growth before formulating strategies and policy stances.
Analysts suggested further enhancement of labour quality and capital efficiency to make potential growth move upward.
Chaired by BIDS Director-General KAS Murshid, researchers from the BIDS, the Bangladesh Bank, the BBS and private organisations attended the event.
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