Political Uncertainty
WB further cuts GDP growth projection
The World Bank on Wednesday lowered Bangladesh’s growth forecast to 5.7 per cent from previous 6.1 per cent due to political ‘uncertainty’ over the general election.
‘Political uncertainty and disruptions in the run up to elections in Bangladesh will continue to slow growth to an estimated 5.7 per cent in FY 2013-14,’ said WB’s Global Economic Prospects released on Wednesday.
WB in its global outlook on growth in last June had said growth of the country’s gross domestic product would be 6.1 per cent.
On both the occasions, the World Bank forecast lower than the government’s growth projection of 7.2 per cent.
Finance minister AMA Muhith, while announcing the annual budget, targeted more than one percentage point higher growth in the current fiscal year over the previous fiscal year.
Bangladesh’s GDP growth slowed down to 6.0 per cent in FY13 from 6.2 per cent in FY 2012.
Other than political uncertainty, WB has identified inflation and investment as other factors for slowing down in economic growth in a number of South Asian countries including Bangladesh.
Disruptions caused by political strife, deepening political tension relating to the impending political transition and inadequate improvements in the provision of power, gas and infrastructure were the key factors in the growth slowdown.
Inflation could reduce space for monetary easing and adversely affect investment and lack of progress in reducing supply-side constraints may also pose significant risks to the economic outlook, it said.
Inflation picked up towards the end of 2013 amid intensification of political unrest, it observed.
‘Coupled with earlier safety problems in garment factories, continued social unrest could adversely affect Bangladesh’s manufacturing and export performance,’ said the WB.
Regarding remittance inflow, it said after rising 12.6 per cent in FY2012–13, remittance inflows to Bangladesh fell 8.4 per cent year-on-year in the first six months of the current fiscal year, reflecting both weak labour exports and political unrest.
The WB said GDP growth in South Asia was projected to improve to 5.7 per cent in 2014 because of global demand and domestic investment.
Apart from South Asia, the WB has projected GDP growth of around 3.2 per cent in the global economy in 2014, 3.4 per cent in 2015 and 3.5 per cent in 2016.
The Bangladesh Development Update by World Bank in last October noted that GDP growth in FY13 decelerated, for the second year in a row, to six percent.
-With New Age input
