The Asian Development Bank on Monday reiterated the country’s GDP growth rate at 5.6 per cent because of political unrest surrounding the January 5 election which resulted in declining remittances and export orders in 2013-14 fiscal year. In its quarterly update released on the day, the Manila-based multilateral donor also said that industrial growth would be lower to 8 per cent and service sector growth would lower to 5.4 per cent because of the political unrest.
The ADB said inflation was on the rise, revenue collection was lagging the target and private sector credit flows slowed due to weak business environment.
Domestic demand was depressed in the first half of the year, as the prolonged political unrest ahead of the January elections lowered consumers’ and investors’ confidence, it said.
‘This is reflected in lower private credit growth, declining imports of consumer goods and capital machinery, and modest growth in the import of raw materials,’ it said in the report.
It, however, said growth was expected to rebound to 6.2 per cent in FY15 as growth prospects in the United States improve and the eurozone posts a mild recovery.
Investment has remained virtually stagnant at around 25 per cent to 26 per cent of the GDP which needs to be raised to 32-33 per cent, it said.
The ADB said production by the readymade garment industry may also be affected if foreign buyers postpone orders complaining about delays in implementing agreed fire and building safety standards to prevent recurrence of industrial accidents.
‘Growing power and gas shortages could constrain industrial production; production costs could rise from the expected rise in power and fuel prices, and higher wages in the garment industry,’ it said.
Service sector growth, which accounts for the principal share of Bangladesh’s output and employment, would slip to 5.4 per cent in FY14 due to the loss of output in the pre-election unrest and slower industrial growth, said the ADB.
‘Lower credit growth for trade; sluggish demand in retail and wholesale trade, hotels and restaurants, transport, and tourism; and the fall in commercial banks’ operating profits are evidence of slower service sector growth,’ it said.
The ADB said agriculture growth was expected to rise to 3.0 per cent in FY14 because of the favorable weather conditions and the previous year’s low base.
‘Disruptions to the distribution network during the pre-election political unrest affected marketing of agricultural products,’ it said.
Earlier in April, the World Bank projected the country’s GDP growth would hit 11-year low to 5.4 per cent in the current fiscal year because of fallout from the political unrest in the first half of the year.
-With New Age input
