Estimates country lost $1.4b in pre-polls political unrest
The World Bank on Wednesday projected that Bangladesh’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. The WB said due to the political unrest in the run-up to the January 5 national elections country incurred a value added loss of $1.4 billion of which 86 per cent in the service sector, 11 per cent in the industry and the remaining 3 per cent in the agriculture.
The WB’s 5.4 per cent growth projection for the FY 2013-2014 is the lowest among the estimates made by the government, Bangladesh Bank and other international lenders for the 2013-14 financial year.
‘The loss [due to the political unrest] has reduced the growth rate from the 6.2 per cent benchmark to 5.4 per cent where service sector suffered the most because of weak consumption growth,’ WB Dhaka office lead economist Zahid Hussain said at a briefing at the bank’s office in the capital.
If the country achieved the WB-projected growth of 5.4 per cent, it would be the lowest since FY 2002-2003 when the economy grew by 5.26 per cent.
The government in the budget for the current fiscal year projected 7.2 per cent growth but brought down the target to 6.5 per cent last month.
The WB in October last year had projected the GDP growth at 5.7 per cent.
The Asian Development Bank last week also brought down its growth projection to 5.6 per cent from 5.8 per cent it had predicted in October last year.
Zahid said that most of the economic indicators suggested the growth would be slower in the current fiscal year.
Only power and export sectors witnessed improvement so far in the fiscal year but export growth is on the declining path, he said.
Besides, growth in production and investment-related imports was weak and the private sector credit growth was at historic low, said Zahid.
‘So there is declining remittance, garment sector image crisis, financial stress and disruption for political turmoil in the current fiscal year,’ he said.
He said the implementation of annual development programme was facing setback because of the political unrest.
‘The government has lowered the ADP size to $600 billion but I believe achieving $500 billion would be satisfactory in the current fiscal year,’ he said.
Zahid said the recent political calmness was good enough for trading or production activities.
‘But as the investment is a mid- and long-term issue, uncertainty is there,’ he said.
Asked whether all-party participatory polls would assure investors, Zahid said, ‘I will not comment about the elections. But stability is a must for economic growth.’
He said power and transport-related works should be priority at this moment.
‘Transport does not mean only the Padma bridge. Construction of the highways should also be given priority,’ he said.
Zahid said the government should introduce ‘no power no payment’ for the rental power plants.
He said the government should emphasised on base-load power plant more and try to move from the rental solution.
‘The businessman will always try to maximise their profit and would try to continue that. But the policymakers should think the greater perspective while taking decision,’ he replied to the question whether the rental power plant owners are influencing government decision about base-load power plant.
He said financial solvency of the Bangladesh Power Development Board would encourage investors.
He said the compliance issue in the garment sector would be crucial as some garment units were shut down, causing some unemployment.
‘The garment sector is going through a transitional period. But the economies of the US and the European Union are catching up which is a good news for us,’ he said.
He said the image crisis of the garment sector and the issue in the GCC labour market should be addressed with priority.
‘GDP growth could rise and stay above 6 per cent if monetary policy focuses growth than inflation. Tighter monitoring can prevent loan frauds,’ Zahid said.
WB acting country head Christine E Kimes and lead economist Salman Zaidi were also present on the occasion, among other.
-With New Age input
