The World Bank on Wednesday estimated that the GDP growth of Bangladesh would be 6.2 per cent in 2014-15 fiscal year, which is so far the lowest projection by any international agency. The government’s GDP target is 7.3 per cent for FY2014-15 whereas the Asian Development Bank in late September projected the country’s GDP growth at 6.4 per cent and International Monetary Fund 6.25 per cent in the current fiscal year.
The WB projection came in the Export Opportunity report of the bank that was released on October 4 focusing on the South-Asian economies.
The World Bank report forecast accelerated economic growth because of regaining political stability and a renewed focus on growth in the country.
‘This forecast assumes continued macro-economic stability and a boost for domestic consumption from remittances and domestic demand from public infrastructure investments,’ said the WB report.
In the provisional estimate of the last FY2014, GDP growth of the country was projected at 6.1 per cent.
‘Achieving the FY15 budget’s very ambitious growth target of
7.3 per cent will require the total investment-to-GDP ratio to rise by over 5 percentage points—to 33.8 per cent (FY06 base) from 28.7 per cent in FY14,’ said the report.
The report said that Bangladesh’s policy priority should be swift transformation of the garment industry, finishing ongoing infrastructural projects, develop special economic zones and enact public-private partnership law.
‘Bangladesh could witness a financial account surplus in FY2014-15, inspite of a decline in FDI inflows and a sharp increase in outflows through trade credit, largely on account of a reversal from errors and omissions,’ it said.
The WB report said that implementation weaknesses were affecting Bangladesh’s fiscal policy.
‘There was a revenue shortfall for the second year in a row, forcing a revision of targets. The shortfall was compensated by sluggish expenditure growth, although this was mainly due to poor implementation of the public investment programme,’ it said.
The WB report said economic growth in South Asia is forecast to accelerate to 2016 led by an increase in activities in India, the biggest economy in a region that has the world’s largest concentration of poor people.
The region’s economy will expand by a real 6 per cent in 2015 and by 6.4 per cent in 2016 compared to 5.4 per cent this year, potentially making it the second fastest growing region in the world after East Asia and the Pacific.
The Indian economy, 80 per cent of the region’s output, is set to grow by 6.4 per cent in fiscal year (FY) 2015-16 after 5.6 per cent in FY2014-15.
‘The outlook over the next years for South Asia indicates broad economic stability and a pick-up in growth with potential risks concentrated on the fiscal and structural reform side,’ said Martin Rama, Chief Economist for South Asia at the World Bank.
‘Future growth will increasingly depend on strong investment and export performance,’ he said.
India is benefiting from a ‘Modi dividend’, the report said, with economic activities buoyed by expectations from the newly elected government of Prime Minister Narendra Modi.
The question for Pakistan, as the region’s second biggest economy, is whether recent political turmoil had damaged investor confidence and thereby weakened growth prospects.
According to the report, it is still too early to assess the impact of events this year but an early estimate suggests short-term losses equivalent to 2.1 percent of Gross Domestic Product. Economic growth is forecast at 4.4 per cent in FY2015 after 4.1 per cent this year.
Sri Lanka is expected to continue its strong growth, at 8.2 per cent in 2015 rising from 7.8 per cent this year. Afghanistan is on a more fragile path, dominated by security and political concerns, after having grown by a modest 1.5 per cent in 2013.
-With New Age input
