Homo Sapiens
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There is a sustained propaganda in PDF that Bangladesh's nominal GDP is inflated by adding up inflation over the years and it is actually a lot less(28 percent less in by 2017) than actual/real GDP. For example, according to World Bank, Bangladesh's real GDP in 2010 constant dollar in 2017 is 180 billion dollar, whereas in the same year, GDP in current price is 250 billion dollar.
It is falsely propagated that, this gap is because, current BD govt. is engaged in GDP manipulation to look it good by adding inflation in it by fraudulent means. Now before examining this claim, we have to consider that, a substantial gap between nominal GDP in current price and constant price is not something unique to Bangladesh.
https://data.worldbank.org/indicator/ny.gdp.mktp.cd
https://data.worldbank.org/indicator/ny.gdp.mktp.kd
According to world Bank, in 2017 China's 2010 constant price nominal GDP is 17 percent less than the GDP in current price. For Pakistan, it is 21 percent, for Kenya, it is 27 percent less than current price. On the other hands, many European countries and some other countries like Turkey shows their GDP in constant price is higher than the current price. Some other countries shows little difference between constant and current price(such as India). But the matter of fact that, all countries shows some variation.
Now question is, why this variable outcome for different countries? It is not due to what propagated here that, constant/Real GDP for Bangladesh is low because pilling up of inflation with real GDP by dishonest BAL govt.(then question arises, China, Pakistan, Kenya and many other countries who also shows significantly lower GDP in constant price are also run by BAL govt.? even if BAL manage to manipulate somehow, why IMF, World Bank would accept it?)
The real reason for this diverging outcome of each country is due to relative currency depreciation or appreciation against dollar. It is the magnitude of currency depreciation or appreciation against dollar which determine about whether a country's constant GDP will be lower or higher than current GDP and how much. The reason why Bangladesh show large gap(constant GDP 28 percent less than current nominal GDP), is because Taka's depreciation against Dollar is relatively little. Taka depreciated just 10 percent against Dollar in 2010-2017 period. So, Bangladesh's nominal GDP in current price grew relatively faster than many other countries because Taka lost little values while high GDP growth rate and Dollar inflation(which is same for every country) over the years made faster incremental growth.
While many currencies such as Turkish Lira, Euro or Indian Rupee depreciated against Dollar considerably more in last several years and their nominal GDP in current price rose more slowly. So, ultimately it is not about inflation which make a variation of Nominal GDP in constant dollar for different countries. But the GDP growth rate and currency rate fluctuation. here effect of inflation is same for every country. So inflation is not a factor.
The heavy depreciation of Turkish Lira against dollar in recent time means that it's constant price GDP is now one and half times bigger than current price GDP. Another fact is, the recent heavy depreciation of Pakistan Rupee against Dollar will show convergence of Pakistan's constant GDP and current GDP figure in World Banks's 2018, 2019 calculation from the previous relatively bigger gap. World Bank is clear about this fact of Currency exchange rate effect on GDP in constant price and current price.
https://datahelpdesk.worldbank.org/...is-the-difference-between-current-and-constan
Another fact is need to highlight here. 'Nominal GDP in constant price in Dollar' is something which only World Bank publish. IMF, UN do not bother to publish such data. IMF publish GDP in constant price in national currency of the respective country though. So exchange rate against dollar effect here is absent.
This nominal GDP in constant price by World Bank means little in a country's international standing in GDP. Nominal GDP itself is vary much of a thing of currency value. So, nominal GDP in constant price means little because, currency exchange rate at present which really matters and the fact that, in nominal GDP in current price, effect of Dollar inflation is same for every country.
For Example, suppose country A and B's real GDP growth is 4 and 6 percent respectively, and Dollar inflation is 4 percent. So at the end of the year, the nominal GDP growth in current price for country A would be=4+4=8 percent and country B, it would be=6+4=10 percent. So, for both countries, effect of Dollar inflation is the same. For above mentioned facts, all the GDP ranking in the world are done by Nominal GDP in current price. No one do it by GDP in constant price from 2010.
GDP in constant price is just a calculation of GDP without taking into effect of Dollar inflation. It is a virtual concept. It has no practical value, because inflation of dollar can not be separated from GDP in real world.
So, for Bangladesh, like any other country in the world, it is the current nominal GDP volume which matter. Not the GDP in constant price. And for living standard, current GDP PPP per capita matters.
It is falsely propagated that, this gap is because, current BD govt. is engaged in GDP manipulation to look it good by adding inflation in it by fraudulent means. Now before examining this claim, we have to consider that, a substantial gap between nominal GDP in current price and constant price is not something unique to Bangladesh.
https://data.worldbank.org/indicator/ny.gdp.mktp.cd
https://data.worldbank.org/indicator/ny.gdp.mktp.kd
According to world Bank, in 2017 China's 2010 constant price nominal GDP is 17 percent less than the GDP in current price. For Pakistan, it is 21 percent, for Kenya, it is 27 percent less than current price. On the other hands, many European countries and some other countries like Turkey shows their GDP in constant price is higher than the current price. Some other countries shows little difference between constant and current price(such as India). But the matter of fact that, all countries shows some variation.
Now question is, why this variable outcome for different countries? It is not due to what propagated here that, constant/Real GDP for Bangladesh is low because pilling up of inflation with real GDP by dishonest BAL govt.(then question arises, China, Pakistan, Kenya and many other countries who also shows significantly lower GDP in constant price are also run by BAL govt.? even if BAL manage to manipulate somehow, why IMF, World Bank would accept it?)
The real reason for this diverging outcome of each country is due to relative currency depreciation or appreciation against dollar. It is the magnitude of currency depreciation or appreciation against dollar which determine about whether a country's constant GDP will be lower or higher than current GDP and how much. The reason why Bangladesh show large gap(constant GDP 28 percent less than current nominal GDP), is because Taka's depreciation against Dollar is relatively little. Taka depreciated just 10 percent against Dollar in 2010-2017 period. So, Bangladesh's nominal GDP in current price grew relatively faster than many other countries because Taka lost little values while high GDP growth rate and Dollar inflation(which is same for every country) over the years made faster incremental growth.
While many currencies such as Turkish Lira, Euro or Indian Rupee depreciated against Dollar considerably more in last several years and their nominal GDP in current price rose more slowly. So, ultimately it is not about inflation which make a variation of Nominal GDP in constant dollar for different countries. But the GDP growth rate and currency rate fluctuation. here effect of inflation is same for every country. So inflation is not a factor.
The heavy depreciation of Turkish Lira against dollar in recent time means that it's constant price GDP is now one and half times bigger than current price GDP. Another fact is, the recent heavy depreciation of Pakistan Rupee against Dollar will show convergence of Pakistan's constant GDP and current GDP figure in World Banks's 2018, 2019 calculation from the previous relatively bigger gap. World Bank is clear about this fact of Currency exchange rate effect on GDP in constant price and current price.
https://datahelpdesk.worldbank.org/...is-the-difference-between-current-and-constan
Another fact is need to highlight here. 'Nominal GDP in constant price in Dollar' is something which only World Bank publish. IMF, UN do not bother to publish such data. IMF publish GDP in constant price in national currency of the respective country though. So exchange rate against dollar effect here is absent.
This nominal GDP in constant price by World Bank means little in a country's international standing in GDP. Nominal GDP itself is vary much of a thing of currency value. So, nominal GDP in constant price means little because, currency exchange rate at present which really matters and the fact that, in nominal GDP in current price, effect of Dollar inflation is same for every country.
For Example, suppose country A and B's real GDP growth is 4 and 6 percent respectively, and Dollar inflation is 4 percent. So at the end of the year, the nominal GDP growth in current price for country A would be=4+4=8 percent and country B, it would be=6+4=10 percent. So, for both countries, effect of Dollar inflation is the same. For above mentioned facts, all the GDP ranking in the world are done by Nominal GDP in current price. No one do it by GDP in constant price from 2010.
GDP in constant price is just a calculation of GDP without taking into effect of Dollar inflation. It is a virtual concept. It has no practical value, because inflation of dollar can not be separated from GDP in real world.
So, for Bangladesh, like any other country in the world, it is the current nominal GDP volume which matter. Not the GDP in constant price. And for living standard, current GDP PPP per capita matters.
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