It says GDP growth to be only 5.7pc
The Asian Development Bank has projected that the country’s GDP growth will be 5.7 per cent, lower than the World Bank and International Monetary Fund estimates of 5.8 per cent, in the current fiscal year because of political uncertainties and stagnant economy of Europe.
The bank in its latest Development Outlook released on Tuesday made the forecast of lower GDP although the government in the last few days had expected that the GDP (gross domestic products) would grow by 6.6-6.8 per cent.
The government initially set a target to achieve a 7.2 per cent GDP growth in the current budget, but finance minister AMA Muhith in the last few weeks said that the rate would not be achieved because of political unrest.
The country achieved 6.30 per cent growth in last fiscal year.
The ADB said that the country’s export sector had been shaken slightly as the economy of Euro area stagnated and US recovery remained frail.
In domestic front, despite higher remittances, growth in demand for private consumption is expected to weaken as households adopt a cautious approach to spending because of political uncertainties ahead of parliamentary elections expected by early 2014, depressing production in industries focusing on domestic markets, said the Manila-based lender.
‘Lower rice price will further dampen consumer demand through reduced agricultural income,’ it said,
Besides, the continued decline in imports of capital machinery and slow import growth for raw materials indicate lower utilisation of existing production capacity and a lull in investment.
‘A drop in import letters of credit opened for machinery and industrial raw materials signals weak economic activity in the coming months,’ said the ADB.
The report projected average annual inflation at 7.8 per cent in the current fiscal year.
The current account is projected to show a larger surplus of 2 per cent of GDP in FY2013 as the trade deficit narrows.
With some strengthening of economic activity expected in the euro area and the US in 2014, GDP growth is projected to recover moderately to 6 per cent in that year on the back of gradual rises in exports, consumer spending, and investment, it said.
The report said that Bangladesh needed to give priority to enhancing its business climate, which the World Bank’s Doing Business 2013 shows deteriorated in the past year.
-With New Age input
