High household costs blight basic services

Food, housing and utilities account for a major portion of household consumption expenditure in Bangladesh, depriving people of getting other basic services like healthcare and education.
In fiscal 2008-09, total household consumption expenditure soared to 77.52 percent of gross domestic product (GDP) from 74 percent three years ago, according to a Bangladesh Bank monetary policy review released recently.
Of the total expenditure, 41.20 percent was used for food and non-alcoholic beverages, over 13 percent for housing and utilities and nearly 4 percent for transportation and communication.
Expenditure for food was 38.4 percent of GDP in fiscal 2005-06 and 12.38 percent for housing and utilities. “Household consumption expenditure increased in fiscal 2008-09 mainly for food, housing, energy and utilities," the review said.
The review found increased disposable income by way of remittance inflows from expatriates supported the expenditure rise.
However an economist said people will not be able to come out of the poverty cycle if they have to spend a lot of their income on food and housing.
He called upon the government and policymakers to facilitate investment to spur employment and income generation.
“The situation will not improve without a significant increase in investment,” said Zaid Bakht, research director at Bangladesh Institute of Development Studies (BIDS).
Investment as a percentage of GDP has been static at around 24 percent for several years.
Savings should increase to meet investment demands, Bakht said. But gross domestic savings (GDS) showed a declining trend in the year that ended in June 2009. Government data shows that GDS as a share of GDP declined to 20.02 percent in fiscal 2008-09 from 20.31 percent a year ago.
“A rise in savings alone cannot help people come out of poverty if savings are not invested properly,” Bakht said.
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