It is true that Bangladesh witnessed heightened economic activity during the 15-year rule of the Sheikh Hasina government. But is her government guilty of inflating the numbers to hide the apparent weaknesses of the economy?
According to the International Trade Centre (ITC)'s Trade Map mirror data, Bangladesh’s exports have increased nearly four times since 2008 (when Hasina came to power), from $17.66 billion in 2009 to $67.49 billion in 2022.
Leaving the Covid-hit 2020 aside, the numbers have only grown.
In July, the country’s Ministry of Commerce claimed that the total exports zoomed to $64.55 billion, higher than the targeted $62 billion, in the 2022-23 (July-June) fiscal year.
The goods exports were pegged at $55.55 billion, 6.7 per cent higher than in the previous year.
The achievements are startling, as the period coincided with a slowdown in global trade. Most major exporting nations suffered a decline in fortunes from the July-September 2022 quarter.
Such exceptions are, however, familiar to Bangladesh.
Over the last decade, both India and China saw ups and downs in their year-on-year export performance; Bangladesh did not. Vietnam saw secular growth, but they have a huge export basket. In comparison, Dhaka has only cheap garments to sell.
That takes us to the question: How real are these data?
The answer was found recently, as Dhaka was scrambling for foreign exchange. According to the country’s central bank, the goods export receipts in 2022-23 were $12 billion short of the shipment value.
If the receipts are taken into consideration, Bangladesh’s exports have declined from $43.68 billion in 2021-22 to $43 billion in 2022-23.
Some media reports attribute the gap to double counting. Many blame it on the parking of export revenues abroad.
Both the claims appear to be a little over the top. Mis-invoicing and capital flight are common in Bangladesh. However, managing a $12 billion surplus (21 per cent) on the $55 billion export of cheap t-shirts, that too in depressed market conditions, is impossible.
And if exporters parked so much of the export revenue abroad, the production at home must suffer from capital constraints, unless, of course, the government keeps bridging the gap with loans that will never be returned.
Yet the core issue remains. Deviation between shipment data and receipts is common to all countries. Disputes regarding the quality of shipment are a common cause. There are other reasons, as well. However, rarely does a country suffer as high a deviation.
Interestingly, Bangladesh has become highly irregular in reporting its export performance to the trusted global data platform the United Nations Comtrade since 2013, thereby denying opportunity options for data integration.
The ITC Trade Map doesn’t have ‘direct data’, sourced from the UN Comtrade, on Bangladesh after 2016. The Global Financial Integrity (GFI) report, which sources information from the UN Comtrade, is also in the dark.
The questions do not stop there.
In July, Commerce Minister Tipu Munshi announced that the country has upped the annual service exports to nearly $10 billion. In September, local media reported a 15 per cent decline in service exports to $7.5 billion in 2022-23.
It's a data mayhem, where every piece of information is doubtful.
According to Bangladesh Bank, the export of garments grew by 17 per cent in knitwear (HS 61) and 7 per cent in non-knitted or woven (HS 62) segments during July-August 2023. Global trends do not justify such growth.
Both India and Vietnam reported a sharp decline in exports in the respective categories during this period. According to the ITC Trade Map, Vietnam’s August data is “tentative,” as the reporting process is not complete. The Indian data is provided by the country’s Commerce Ministry.
Strikingly enough, the export growth of Bangladesh is coming on the back of a severe foreign exchange crisis and import restrictions beginning last year. From $48 billion in 2021, Dhaka now has a $21 billion accessible forex reserve.
At less than $5 billion, the monthly import bill is now below the 2019 level. According to the central bank, the import of intermediaries for readymade garment production was down by 26 per cent during July-August.
The contradiction in Bangladesh’s growth story is apparent. And that raises the concern that Dhaka is cooking up numbers to present a rosy picture of the economy. If they do, that would be foolish.
The administered exchange rate of Bangladeshi Taka reduced from 100 to 110 against the United States (US) dollar over the last year. But no one gets foreign currency at that value.
The unofficial or kerb market price of the dollar crossed Taka 120. Inflation has been hovering near 10 per cent for the last six months.
The economy is close to a tipping point. Cooking up numbers will add to the problem.
The vice president of the Bangladesh Knitwear Manufacturers and Exporters Association questioned the credibility of export data. Knitwear is Bangladesh’s top export item.
According to him, the sector has been witnessing a drop in orders since the middle of 2022. Most of the factories, including his, are running on low capacity for more than a year. He has no clue as to how the official data can be so different from the ground realities.
The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) launched a probe into the data discrepancy. The International Monetary Fund (IMF), which promised a $4.7 billion loan to the country, also sought clarifications.
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