Bangladesh audit flags inflated manufacturing data in GDP growth estimates

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Bangladesh GDP audit findings

Highlights

An audit found that from FY2014-15 to FY2018-19, manufacturing accounted for 41% of Bangladesh's extra GDP growth, but several subsector figures were inconsistent with actual industrial performance.
Abnormal growth rates were flagged in the cement industry (61.6%, 51.7%, 45.9%) and shipbuilding (242.4% in FY15, 97.6% in FY16) due to improperly calculated value addition, poor inventory adjustment, and potential data fabrication.
Bangladesh's government announced steps—including CAPI, geocoding, using Bangladesh Bank data, and independent output indicators—to improve the accuracy and credibility of GDP statistics after overstated sectoral estimates.

Audit findings on manufacturing estimates

As reported by The Business Standard, citing the planning ministry's expert panel, manufacturing accounted for nearly 41% of the additional GDP growth recorded between FY2014-15 and FY2018-2019 compared with the preceding four years, but several subsector figures did not align with actual industrial performance.

The report says average real GDP growth stood at 6.27% during FY11 to FY14, then rose to 7.39% in the following five fiscal years, an increase of 1.13 percentage points. Of that additional growth, manufacturing contributed 0.4627 percentage points, or around 41%, while nearly 79% of the sector's additional growth came from medium and large-scale industries. During the period, manufacturing's share of national GDP increased from 15.16% to 18.25%.

An analysis of the Industrial Production Index found abnormal growth patterns in several subsectors, with the cement industry drawing particular concern. The report says value addition from cement production using imported clinker was not properly calculated, and production estimates were made without adjusting for inventory changes. As a result, the cement industry was shown to have recorded growth of 61.6%, 51.7% and 45.9% in three consecutive years since 2015.

Similar inconsistencies were identified in shipbuilding, which was reported to have grown by 242.4% in FY15 and 97.6% in the following fiscal year. The committee says such unusually high growth may have resulted from counting a single large shipbuilding order, preliminary activities such as steel cutting, or the output of one company as production for the entire subsector.

Statistical reforms and policy implications

The findings are presented on 14 November at a seminar titled "Peer Review of Forensic Audit Report on GDP Estimates" at the Bangladesh Bureau of Statistics conference room in Agargaon, where Bangladesh Institute of Development Studies Director General Dr AK Enamul Haque presents the report. The BBS organises the seminar to gather feedback on the draft, which is prepared to improve the accuracy, credibility, usability and accessibility of official statistics.

Speaking at the seminar, Rashed Al Mahmud Titumir, finance and planning adviser to the prime minister, says GDP growth was overstated by incorporating fabricated estimates in seven specific sectors based on secondary-source data. He says the garment industry has relatively greater transparency in its data, making similar manipulation more difficult, while abnormal growth figures in several non-RMG manufacturing subsectors were used to inflate overall manufacturing growth.

Titumir says statistics are public assets rather than a political tool and stresses the need to restore credibility in national accounts data. He says the government has taken steps including the introduction of Computer-Assisted Personal Interviewing, or CAPI, and geocoding for field-level data collection. The government also plans to use Bangladesh Bank data instead of customs data for certain calculations and to verify industrial production through independent indicators including electricity and gas consumption.

We have previously noted that IMF support has been paired with pressure for banking and debt reforms in Bangladesh.

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