Warns factory accidents could moderate pace of RMG export growth
The World Bank on Thursday stuck to its projection that the country’s GDP growth would be 5.8 per cent in the outgoing fiscal year despite the Bangladesh Bureau of Statistics’ estimate of 6.03 per cent and the finance minister’s hope of 6.3-6.8 per cent growth.
The international lender also warned that the recent factory accidents could moderate the pace of accelerated growth of Bangladesh’s garment exports.
The WB in its latest Global Economic Prospects (GEP) report released on Thursday said that the economic growth would slow down to 5.8 per cent in FY 2012-13 because of macroeconomic tightening by the government, intensified domestic constraints and political unrest.
The WB in its earlier GEP report in January had projected the growth at 5.8 per cent in the current FY lowering the projection of 6 per cent growth made in October 2012 issue of GEP.
The BBS in May estimated that the growth would be 6.03 per cent because of fall in agriculture, industrial and investment growth.
Finance minister AMA Muhith, however, in his budget speech ditched the BBS estimate for the second consecutive year.
Muhith claimed that the BBS did not take the actual agriculture growth into account and that he thought that the GDP growth would be 6.3-6.8 per cent in the current fiscal year that ends on June 30.
The World Bank report said that the country’s economy had grown by 6.2 per cent in the last fiscal year of 2011-12 against almost similar estimate of BBS of 6.23 per cent.
‘Weakening external demand, domestic supply constraints [including unreliable electricity provision], and social unrest resulted in growth slowing to 6.2 per cent in FY2011-12 from 6.7 per cent the previous fiscal year, with a further slowdown expected for FY2012-13,’ it said.
‘Subsequent macroeconomic tightening and intensified domestic constraints, combined with disruptions caused by political unrest, contributed to the projected slowdown [to 5.8 per cent] in FY2012-13,’ it said.
The report said that Bangladesh’s export volume growth accelerated as a result of strengthening demand for its garment exports although recent factory accidents like Rana Plaza collapse could moderate the pace of increase.
The report said that inflation pressure was still high in India and Bangladesh.
It warned that countries like Bangladesh, India and Nepal which were entering election process could face further inflationary pressure and internal and external imbalances because of spending pressures associated with elections.
‘Risks in the post-election period include the possibility that past reforms are reversed or implementation delayed,’ it said.
The WB, however, said that despite decline in exports, Bangladesh’s current account position improved because of falling import and increased remittance.
It projected that the country’s GDP growth in the coming fiscal year 2013-14 would be 6.1 per cent against the government target of 7.2 per cent.
‘Several domestic weaknesses, including infrastructure gaps [electricity and roads] and social unrest are expected to hold back a firmer recovery,’ it said.
-With New Age input
