Dhaka, Jun 3 ( bdnews24.com)—The World Bank has expressed happiness at the main indices of Bangladesh's economy but said it is still disappointed with the investment picture. The international lending agency said the GDP will grow at 6.3 percent in the current 2011-12 fiscal. The annual GDP growth will be 5.5 percent in the developed countries and 6.5 percent in South Asia countries. The Bank said one of the main indicators to Bangladesh's economic condition is inflation, which started to fall and was already a single-digit figure (under 10 percent). Inflation will continue to go down while the tax collection is satisfactory. Remittance inflow is positive and stability has returned to the share market to some extent, it observed. However, stagnation in investment still exists due to gas and power problem and the government is paying more subsidy in the fuel sector as its import has risen. The Washington-based agency made the observations about the Bangladesh's economy at a view exchange meeting with the journalists on Sunday. The meeting titled "Bangladesh Economic Outlook and Policy in the context of the Global Environment" was organised at the Westin Hotel. Senior Economist of WB's Dhaka office Zahid Hussain read out the written statement on the economic condition. Lead Country Economist Sanjay Kathuria and Poverty Reduction and Economic Management Director Ernesto May took questions from journalists. The meeting began with the delivery of a speech by the organisation's Country Director Ellen Goldstein. "Bangladesh economy has managed to regain trust. International credit rating organisations Standard and Poor's have found Bangladesh's economy stable. Our consideration also says the same," said Hussain. "Bangladesh will achieve a 6.3 percent GDP in the current fiscal. The growth has to be considered good enough under the existing global circumstances. The achievement is down to growth in industrial and service sectors," he added. The World Bank had predicted on Apr 11 last year that Bangladesh will achieve a 6.2 percent GDP during the current fiscal while International Monetary Fund said it would be 5.5 percent. However, Finance Minister Abul Maal Abdul Muhith has been talking of achieving a 7 percent GDP as targeted. Zahid Hussain said a contractionary monetary policy has contained the rising inflation and "we consider the step as an up-to-date one". "We know it takes time for monetary policy to have an impact. The monetary policy the central bank has taken is going to bring down inflation further in the future," said the economist. According to the latest statistics of Bangladesh Bureau of Statistics, inflation rate was 9.93 in the month of April. The economist, however, suggested the government to reduce its borrowings from the banks. Regarding the share market, he said, "The share market was unstable for a number of days. Now the market is returning to stability." Asked whether the central bank's monetary policy would have a negative impact on investment, he said, "According to the statistics of March, loan inflow in the private sector has been increased by 19.5 percent. We believe this is normal." "One thing has to be considered at this stage. The prerequisite for investment is fuel and infrastructure. Investment will not increase unless these problems are solved. Everyone is playing a 'broken record' regarding these. But solution to the problems is yet to be found," he continued. He pointed out three risk factors for economy and said export and growth were still positive. But export of readymade garments was decreasing and the government needed to be cautious. "There is a risk in the sector of remittance. Any unrest in the Middle East may negatively impact the remittance sector. The highest risk lies in the fuel sector as a hike in fuel prices will affect the economy, he added. Goldstein said World Bank was continuing to support the government's objective of achieving annual growth rates high enough to become a middle income country by 2021. "Achieving the middle income country status will require accelerated, sustainable and inclusive growth underpinned by structural reforms and stronger governance at central and local levels." Goldstein said while the World Bank Gropes have increased their focus on development results, the disbursement saw an upward trend over the last four years. "In fact, the total disbursement for all World Bank-financed projects in FY 12 till April 30, 2012 is US$ 400 million, compared with US $ 305 million disbursed during the same period last year." "Bangladesh's past performance has been positive and encouraging. Particularly impressive has been its resilience to various shocks, the most recent being the global financial crisis of 2008 and the ongoing eurozone crisis." The Country Director said overall, they found Bangladesh's most recent economic growth quite healthy by developing country standards. "But there are several headwinds that could derail growth in the near future," she warned. "Spillover effects of recession in the eurozone and oil price increases are the two headwinds that pose the most serious downside risks to Bangladesh's growth from external sources." Goldstein said all Bangladesh can do was to prepare to face these risks by creating policy space, so that it can respond appropriately and in time. However, she observed, these are not the only risks. "Bangladesh's ability to provide adequate infrastructure, energy and a business friendly regulatory environment has also suffered in recent years. "If these are addressed, we feel Bangladesh will be able to overcome the impact of a weak global economy without much difficulty. The lending agency's local chief assured Bangladesh of the World Bank Group's support in its development and said the current government has had "sufficient time to determine priorities and define strategies". "The Sixth Five Year Plan is soon to enter its third year of implementation. The challenge now is to effectively speed up implementation to deliver results on the ground. "The Bank Group is ever ready to provide solid support for implementation of government priorities, in areas that government demonstrate commitment and good governance," she further added. bdnews24.com/arh/eh/bd/1750h |
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