Agencies

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The Asian Development Bank has predicted that Bangladesh’s GDP or gross domestic product growth is expected to slow to 5.6% in the current 2013-14 fiscal year ending next month, with remittances declining and export growth tapering during the rest of the year because of fewer orders.

The Manila-based multilateral funding agency in its regular publication of Quarterly Economic Update for January-March released yesterday said domestic demand was depressed in the first half of the year, as the prolonged political unrest ahead of the January elections lowered consumer and investor confidence, Xinhua reported.

This is reflected in lower private credit growth, declining imports of consumer goods and capital machinery, and modest growth in the import of raw materials, it said.

Growth is expected to rebound to 6.2% in 2014-15 fiscal year (July 2014-June 2015), aided by higher remittance and export growth, as growth prospects in the US improve and the Eurozone posts a mild recovery, said the ADB quarterly.

“The likely rise in consumer and investor confidence as the political situation stabilises is expected to stimulate demand and strengthen growth momentum.”

ADB has joined various local and foreign agencies which had earlier pegged Bangladesh’s GDP expansion below 6% for the current 2013-14 fiscal year (July 2013-June 2014).

World Bank had earlier trimmed its economic growth forecast for Bangladesh this year from 6.2% to 5.4%.

The Washington-based lender also cited disruption from political turmoil, declining remittances, garment image crisis, shortage in gas and power supply, congested high ways as reasons for the fall.

The political turmoil in the last quarter of 2013 inflicted a value added loss of about $1.4bn, of which 86% was in services, 11% in industry and the remaining 3% in agriculture, it added.

The Bangladeshi government’s revised growth forecast is currently 6.5% for 2013-14 fiscal year.

On April 8, the International Monetary Fund (IMF), in a statement said: “Real GDP growth is expected to be below 6% for fiscal year (July 2013-June 2014) as unrest and uncertainty in the run-up to the January 2014 general elections have taken a toll on the Bangladesh economy.”

According to the ADB quarterly, although Bangladesh attained annual GDP growth rates of more than 6% during the last decade, actual GDP growth falls short of the Sixth Five Year Plan (fiscal 2010-11-2014-15) targets.

ADB says the government needs to boost investment in infrastructure and skills development to raise the economy’s productive capacity and shift the economy to a 7-8% growth trajectory.

Investment has remained virtually stagnant at around 25-26% of GDP, it needs to be raised to 3233% as envisaged in the Sixth Five Year Plan, said the Manila-based lender.