Bangladesh economy grows 6 pct despite disasters - IMF
- DHAKA (Thomson Financial) - Bangladesh's economy grew by more than 6 percent in the past fiscal year, despite two natural disasters, because of strong exports and remittances, the International Monetary Fund said Tuesday.
The impoverished South Asian nation was rocked by widespread flooding last July and a devastating cyclone in November.
Despite this, Bangladesh's 'macroeconomic performance was remarkably resilient in a year of multiple natural disasters and elevated international food and fuel prices,' Thomas Rumbaugh, an adviser for the IMF, said.
Together the two disasters killed 5,000 people, left millions homeless and caused $2.7 billion of damage to crops and property.
'A strong pick-up in domestic economic activity in the second half of the year and rapid growth in garments exports and remittances enabled growth in the FY08 to exceed 6 percent,' Rumbaugh said.
The growth estimate for the year ended June 30, 2008 was about 1 percent more than the Washington-based IMF's earlier forecast.
That previous prediction came after last year's floods -- which submerged 41 percent of the country -- and the cyclone dealt a major blow to economic activity. Exports, led by the garment industry, rebounded to clock more than 15 percent growth in the second half of the year, despite hovering in negative territory in the first quarter. Remittances grew a record 33 percent to $7.94 billion.
The IMF forecast was in line with the military-backed government's projection of 6.2 percent growth for this financial year.
But the IMF warned that high food and fuel prices remain Bangladesh's 'biggest challenge' as inflation -- which was about 10 percent last year -- could really hurt the country's poor. 'The main priority is to keep control of inflationary pressures stemming from global prices and domestic demand,' Rumbaugh said, suggesting the central bank 'curb credit growth' by tightening money supply.
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