UN report sees 6.6pc GDP growth, troubled exports
Bangladesh faces a year of slowing growth, partly caused by contraction in exports due to the eurozone crisis, an annual United Nations report warned yesterday.
Economic growth may slow slightly to 6.6 percent in 2012 from 6.7 percent last year, the UN’s Economic and Social Commission for Asia and Pacific (ESCAP) survey found. The projection is lower by 0.4 percentage point than the government’s 7 percent.
However, the ESCAP growth projection is higher by 1.1 percentage points than the International Monetary Fund’s 5.5 percent.
The UN report puts Bangladesh on par with other Asian countries where growth is predicted to edge down to 6.5 percent in 2012 from 7 percent last year as the rumbling eurozone debt crisis and continued uncertainty over the US economic outlook weaken demand for exports.
“It is a real GDP growth rate as inflation has been excluded from the growth rate calculation,” Dr Mustafa K Mujeri, director general of Bangladesh Institute of Development Studies (BIDS), told reporters at the launch of the report at the CIRDAP auditorium in Dhaka.
Real growth rate is calculated by constant price where inflationary pressure is not counted. On the other hand, nominal growth rate is based on current price that includes inflationary impact.
At present, balancing between the growth and inflation rates would be the key challenge for the government to keep up the growth momentum, Mujeri said.
With growth slowing down, inflation in the Asia-Pacific region is forecast to moderate from 6.1 percent in 2011 to 4.8 percent in 2012, according to the survey, an annual check-up on the region’s progress.
The report has also identified the debt default in the eurozone as the greatest threat to the Asia-Pacific region that may result in a renewed global financial crisis.
ESCAP estimates that such a crisis could lead to a $390 billion loss in the region over 2012 and 2013.
As a result, the exporting countries, especially the least developed and landlocked developing countries would see export contract by 10 percent, according to the study.
The loss of exports could lead to a reduction of growth of up to 1.3 percentage points in 2012 and hamper poverty reduction efforts in the region.
Renewed political deadlock in Greece and the election of a new French president this week raised the possibility of a renegotiation of a key European Union deal to cut massive debts, adding further uncertainty to global markets.
Mujeri said Bangladesh may fail to create new economic activities due to declining prices of its manufactured goods, which would depress growth prospects in the long term.
Bangladesh should reduce its reliance on few labour-intensive industries and go for diversification by using modern technology, he said.
Despite the slowdown, the region’s growth engines are projected to continue to grow at robust rates, said Syed Nuruzzaman, an economist of ESCAP.
China is forecast to grow at 8.6 percent in 2012 after deceleration from 9.2 percent last year, he said.
India is expected to improve its growth performance from 6.9 percent to 7.5 in 2012 as moderating inflation would allow an unwinding of the cycle of monetary tightening during the year, unleashing growth impulses, he added.
The survey urged governments to prepare for a slew of economic and social challenges that will shape their development.
Speculative inflows of money, over reliance on natural resources, income inequality and high rates of unemployment — particularly among the youth — will require careful political attention, it said.
Last year’s disasters in Japan, Thailand and Pakistan estimated to have caused $260 billion losses, which showed that inter-linked regional economies remain vulnerable to sudden shocks, the report said.
-With The Daily Star input
