The Asian Development Bank on Tuesday further lowered the GDP growth projection for Bangladesh to 5.6 per cent in the current fiscal year because of disruption in economic activities amid political unrest. This was the lowest growth projection among the estimates made by the government, Bangladesh Bank and other international lenders for the 2013-14 financial year.The ADB in October last year projected that growth of gross domestic products would be 5.8 per cent in the current fiscal year.
‘Political unrest before national election, possible sluggishness in export and falling remittance would lower the GDP growth to 5.6 per cent,’ said ADB’s principal country economist Mohammad Zahid Hossain while launching the Asian Development Outlook Update 2014 at its Dhaka office.
He, however, said that the average inflation would rise to 7.5 per cent in the current fiscal year compared to previous year’s 6.8 per cent.
‘Effects of supply disruption, rising wages and likely rise in electricity and fuel prices will contribute to higher inflation,’ said Zahid.
He said although exports maintained growth during the political turbulence, the trend was declining.
‘And the trend of remittance is also declining,’ he said.
The export growth would slow down to 9 per cent in the current financial year declining from previous year’s 10.7 per cent.
‘Though the garment export rose by 16.7 per cent in the first 8 months, but is expected to slow down in the remaining period of the fiscal year,’ said Zahid.
In the report, the ADB predicted that the remittance would fall by 3 per cent in 2013-14.
‘Remittance declined by 7 per cent in the first 8 months while the overseas jobs for Bangladeshi workers fell by 13.1 per cent, especially in the Middle East,’ it said.
The ADB said that the domestic demand was depressed in the first half of the current fiscal year as the prolonged political unrest dented consumers’ and investors’ confidence.
The lower private sector credit growth, a decline in consumer goods and capital machinery imports and modest growth of raw material imports also indicated a lower GDP growth.
The government set the GDP growth target at 7.2 per cent for this year but already cut down the projection to 6.5 per cent although Bangladesh Bank has said the growth would be around 6.3 per cent.
The World Bank in October last year projected that the GDP growth would be 5.7 per cent whereas the International Monetary Fund projected 5.8 per cent growth.
The ADB said that the revenue collection slowed to 10 per cent in first seven months of the fiscal year compared to 19.9 per cent annual growth target because of disruption of economic activities.
‘The current spending will be contained by cutting low priority items and by lowering the electricity and fuel subsidy to 2.2 per cent of the GDP compared to 3.1 per cent in the previous year,’ he said.
The ADB projected that the current account would show a deficit of 0.5 per cent in 2013-14 which will decline further in the following year to 1.5 per cent deficit.
The ADB predicted that the agricultural growth will rebound to 3 per cent in current fiscal year compared with previous year’s 2.2 per cent following favourable weather.
‘The industrial growth will slow down to 8 per cent in this fiscal year compared to previous year’s 9 per cent as output lost in the political unrest,’ Zahid said.
He said the service growth will slip to 5.4 per cent from previous year’s 5.7 per cent.
He said if the present political stability continued then the economic outlook of 2015 will improve.
‘It is assumed that the political stability will be restored following the national election,’ he said.
The ADB report also predicted that the central bank will check the inflation and it will be possible to mobilize more foreign funds and thus ensure limited bank borrowing in 2015.
ADB deputy country director Oleg Tonkonojenkov and other senior officials were also present in the occasion.
-With New Age input
