It says major economic indicators ‘doing well’
Bangladesh economy will grow by 6.4 per cent in the current fiscal year as all major economic indicators are performing better than the last year, the Asian Development Bank said on Thursday.
Inflation is also expected to decline to 6.5 per cent in the FY2014-15 from 7.4 per cent in last year, it said. ‘Growth in the country’s gross domestic product will be higher than that of last year when the economy grew at 6.1 per cent as all major economic fundamentals including investment, export and remittance remained on right track with positive signs of improvement,’ ADB principal country economist Mohammad Zahid Hossain said at a press briefing held at its Dhaka office.
At the briefing, the Manila-based multinational lending agency released the Asian Development Outlook Update 2014.
Investment is not fully stagnant now rather it is growing as import of capital machinery and raw materials is increasing along with positive signs in exports due to government’s restructuring measures in readymade garment sector, he said.
He said, ‘ADB is very positive on Bangladesh’s growth this year as things are improving and the trend will continue in the second half of the fiscal year.’
Bangladesh, however, needs more investment to achieve its potential growth rate at 7-plus per cent, he said.
The projected GDP growth, however, is much lower than the government’s target of achieving 7.3 per cent growth in the FY 2014-15.
In the last FY, Bangladesh economy grew by 6.1 per cent, according to the government’s estimation.
According to ADO report, exports and remittances are expected to perform better while private investment will likely pick up on post-election political stability.
Agriculture, industry and services sectors will grow better, compared with that of last year, it said.
According to the report, the government needs to raise the level of private investment, eliminate power deficit, improve infrastructure constraints and boost revenue collection for shifting the economy to a higher growth trajectory.
The ADO also identified some risks to the projection including inability to mobilise sufficient revenue and foreign financing, higher bank borrowing and
any kind of political unrest.
‘Renewed political unrest could dampen investors’ confidence and impede economic activities,’ it said.
According to ADB projection, agriculture will grow up to 3.5 per cent, slightly higher than 3.3 per cent in last year, while industry will grow by 9.2 per cent in the year compared with that of 8.4 per cent in last year because of higher exports and stronger domestic demands.
Services sector will also rise to 5.9 per cent in the current fiscal year from 5.8 per cent in the last fiscal year, it said.
According to the ADB forecast, the export growth of Bangladesh will rise to 13 per cent in fiscal 2014-15, up from 12 per cent in last fiscal year, with the momentum picking up in the second half.
‘Improvements in wages, working conditions, labour rights and building and safety standards will enhance the buyers’ confidence in Bangladesh garment industries that will result to boost exports,’ it said.
Import will also grow by 15 per cent in the year, up from 8.9 per cent in last year, it projected.
It said that petroleum imports would rise to fuel power plants.
Remittance growth in the year is expected to accelerate to 7 per cent compared with 1.6 per cent decline in previous year, it said adding that improved remittance systems, lower costs of sending remittances and a more settled political environment should help boost inflows.
ADB country director Kazuhiko Higuchi also spoke at the briefing.
-With New Age input
