$ 1.4bn loss for political turmoil
Bangladesh’s GDP growth in the current fiscal year will stand at around 5.4 percent due to political turmoil it suffered, the World Bank forecast on Wednesday saying it is not bad if can achieved finally.
The political turmoil in the last quarter of 2013 inflicted a value-added loss of about US$1.4 billion, of which 86 percent was in services, 11 percent in industry and the remaining 3 percent in agriculture, it says.
The global lender came up with the observation while presenting ‘Bangladesh Development Update, April 2014’ at a press conference held its Dhaka office.
It, however, observed that the GDP (gross domestic product) growth in Bangladesh may rise to a potential 6.5 percent within a couple of years if stability prevails.
The government had set a 7.2-percent GDP growth target but Finance Minister AMA Muhith during a half-yearly statement on the economy revised it at 6.5 percent.
Presenting the latest data, lead economist of WB’s Dhaka office Dr Zahid Hussain said 5.4 percent growth is not unsatisfactory at all.
A recovery in export growth and increases in public expenditure are likely to help achieve a 5.4 percent GDP growth in the current fiscal year, slightly higher than the average for developing countries but lower than last year’s 6.2 percent, he said.
The WB sees growing investments in power and roads; manage the transition in readymade garments; and stem the decline in remittances as immediate challenges.
The Bangladesh Development Update April 2014 noted that economic activities recovered in the second half of FY14, driven by resilient exports and domestic demand, following setbacks suffered in the first half due to political uncertainty and turmoil.
A sound macroeconomic management helped contain inflation at a moderate single-digit level, it says.
It observed that the financial sector is stressed and a rise in default risk across the board due to losses inflicted by a prolonged disruption in production and trade has worsened the state of the banking sector.
The state-owned banks were already negatively impacted by the earlier financial scams. The growing nonperforming loans of private commercial banks are also a matter of concern.
On near and medium-term challenges, it said key near-term challenges need prioritized attention.
In the immediate future, Bangladesh faces three sets of formidable challenges -- maintaining stability and resolving the remaining political uncertainties while boosting investment in power and roads; managing well the transition in the readymade garment (RMG) industry; and stemming the decline in remittances.
The medium-term challenge is to boost productivity and the medium-term development challenges include reinvigorating structural reforms that boost supply capacity and productivity by investing in transformative infrastructure, energy and streamlining trade and investment regulations.
The WB says macroeconomic stability must continue and investment-oriented reforms need a new lease of life to help Bangladesh raise its growth rate to 8 percent.
Overall, it observed, the Bangladesh economy did well in the outgoing fiscal year, considering the large costs of political turmoil.
The near- and medium-term outlook is favorable because of the recovery in Bangladesh’s key trading partners and the restoration of internal stability.
A rise in public investment in transformative infrastructure will be critical to boosting private investment and capacity creation.
WB sees 5.4% GDP growth in current fiscal
$ 1.4bn loss for political turmoil