GDP: The growth of GDP in last year was above 6% but it has started to decline and is expected to go down below 5. 7%. This is mainly because of the fall in export since export consist of 20% of GDP in Bangladesh. Moreover, investment and consumption also is decreasing along with the decline in growth in manufacturing and service sectors. The growth of GDP in Bangladesh depend mainly on the industrial and the agricultural sectors. In FY2006-07, the growth rate was 6. 43% that was estimated to be 6. 42% by the BBS. This is mainly due to the decline in agricultural sector.
Despite positive growth in the forestry sub-sector, the agricultural sector was largely affected by the Sidr, that had consequent effect on the agricultural sector till now. The Asian Development Bank (ADB) recently projected the lowest GDP growth for Bangladesh in five years starting from 2009 due mainly to impacts of the global turnmoil. Thus the economic growth is slowing down because of decline in exports and remittances and lower domestic demand. Thus industrial growth is suffering. . According to provisional estimates, the rates of domestic and national savings stand at 20. 08 and 29. 3 % of GDP in FY 2007-08. It is to be noted that the rates for FY 2006-07 were 20. 35 % and 28. 66 % respectively. The rate of investment may decline to 24. 16 % for FY 2007-08 which stood at 24. 46 % in the previous year. In the aggregate investment for FY 2007-08, the public sector accounts for 5. 01 % and private sector accounts for 19. 15 %, which were recorded at 5. 54 % and 19. 02 % respectively in FY 2006-07. Bangladesh’s growth outlook remains fairly robust, down by only half a %age point to 5. 6 % in 2009 (Table: 3). Asian Development Bank forecasts dip in Bangladesh GDP for 2009-10
Apr 01, 2009 (BBC Monitoring via COMTEX) — ADB predicted this year’s growth at 5. 6 %, down by 0. 6 %age points of the previous year’s achievement and around one %age point lower than the central bank’s projection of 6. 5 % for the current financial year. We expect economic activity to slow further to 5. 2 % in 2009-10. Bangladesh achieved over 6 % growth since 2003-04 except 5. 96 % in 2004-05 for damage to crops for floods. The government to invest more to address infrastructure constraints, especially power generation and gas exploration.
Accelerating implementation of the annual development programme and supporting small and medium enterprises have become essential to absorb the likely soaring unemployment shocks in the wake of decelerating external demand. As FDI (foreign direct investment) in gas and power is unlikely to materialise soon because of the global financial turmoil, the government needs to mobilise its own resources and tap external assistance. Industrial growth will slow to 6. 6 % this fiscal year from 7. 6 % last year mainly on declining export demand. Sliding consumer spending will push down the services sector growth at 6 % from 6. % in 2007-08. If normal weather prevails, agriculture output is to rise by 4 % this year, the report said. Inflation is expected to be at an average of 7 % this fiscal year, a significant decline from 9 % projected earlier, because of the falling global commodity and fuel prices, the report said. Inflation is likely to stay at 6. 5 % in 2009-10. Despite a drop in export and remittance earnings Bangladesh’s external current account is expected to show a small surplus in this fiscal year, the report said. But a poor revenue collection is a concern for Bangladesh, which needs additional funding to continue priority public spending.
Domestic productivity and competitiveness should get boost to help the country retain export market share and diversify destinations as well, it said. In a bid to stoke domestic demand, the government has already formed a high-powered taskforce to devise how it can help the businesses absorb the recession shocks. Replying to a query, the ADB country chief said the Bank would sit next month to discuss how it could lend more to Bangladesh to face the global challenges. “The ADB may arrange additional funding or relocation from existing projects or the both,” the decline of growth in crops and horticulture sub-sector.
He said the problems of power shortage, infrastructure inadequacy and high cost of finance had affected most of the garment manufacturers. BBS estimated the GDP growth rate to 6. 21 % in FY 2007-08. The GDP growth rate is assumed slightly lower compared to the previous fiscal year due to the decline of growth in agriculture and manufacturing sectors. It may be noted here that, according to the final estimate, the GDP growth rate was 6. 43 % in FY 2006-07. As per Medium Term Macroeconomic Framework (MTMF), the real growth of GDP for the fiscal year 2008-09, 2009-10 and 2010-11 have been forecasted to be 6. %, 7. 0 % and 7. 2 % respectively. From table 2. 1 it is observed that the per capita GDP and national income is increasing over time. At current prices, the per capita GNI for FY 2007-08 is estimated at Tk. 41103 which is 13. 81 % higher compared to the previous fiscal year. Per capita GDP was Tk. 33607 in FY 2006-07 which increased to Tk. 38056 in FY 2007-08. In FY 2007-08, the growth rate of per capita GDP is 13. 75 % which was 12. 19 % in the preceding fiscal year. In FY 2007-08, the per capita national income and GDP are US$ 599 and US$ 554 respectively. Table 2. shows the Gross Domestic Product (GDP) at current prices from fiscal year 2002-03 to 2007-08. BB governor hopeful of 6pc growth despite grim WB, IMF forecast FE Report Bangladesh Bank governor rejected grim growth prognosis by the World Bank and the International Monetary Fund (IMF), saying the economy is poised to grow around six % this fiscal despite global meltdown. The World Bank said Bangladesh would clock 4. 5 % growth in the current financial year — the lowest in seven years— while IMF put the figure at around 5. 0-5. 5 % for 2009 as the economy is mired by global recession.
But central bank governor Salehuddin Ahmed came out strongly in favour of a robust growth, as he sees fewer bumps in the three remaining months of the current fiscal year. “We’re hopeful of achieving around 6. 0 % growth in 2008-09 fiscal if the overall economic trend continues and the country does not face any major disasters,” Mr. Ahmed said after a meeting with an IMF delegation. “It could come down to 5. 6 to 5. 8 %. But will it drop down to 4. 5 % as predicted by the World Bank? Only three months are left and I am not sure whether there will be a huge recession that can drag down growth to that level,” he said.
Both the multilateral agencies have said that the global economic recession is having a knock-on effect on Bangladesh’s two main economic levers-exports and remittance — with recovery seem unlikely before 2011. On Tuesday Asian Development Bank (ADB) also lowered its Bangladesh growth projection to 5. 6 % for the current fiscal year and 5. 2 % for next fiscal year. Mr. Ahmed said the central bank would “deconstruct” the World Bank projection before making its own growth forecast for the current fiscal. “We will review how the World Bank’s estimated the latest growth forecast for Bangladesh.
We will see on which basis they made the projection,” the BB governor said. The central bank had projected a growth of around 6. 5 % for 2008-9 fiscal when it released its monetary policy in July last year – at time when the world looked perfectly safe from the United States’ housing price bubble. But as the US sub-prime housing crisis hit the global financial behemoths and snowballed into a full-blown economic recession, the BB lowered the growth projection to over 6. 0- 6. 2 %. Last month both the BB and Bangladesh Bureau of Statistics forecast the GDP growth in the current fiscal at 6. % as the exports slowed to a meagre 1. 2 % in the second quarter due to the meltdown. The governor ruled out bailout package for the overall economy, saying the government should instead help out the sectors already affected by plunging export orders. He said remittance remained robust although overseas employment plummeted by 38 % in the first three months of 2009. “Remittance is still in good shape. We got figure of March and it shows good trend. We are not seeing overseas employment numbers as we have expected. But it has not drastically declined,” he said
He said the main impact of the global meltdown would be felt in 2009-10 fiscal year, export is set to cool further and there will be fewer jobs available in the Middle-East and Southeast Asia. “The next budget would be very crucial,” Mr. Ahmed said, adding the government should increase spending in infrastructure, especially energy, in the budget to boost up machinery import and spur economic activities. Meanwhile, World Bank in Dhaka projected that GDP growth rate of Bangladesh may decline to 4. 8 % in the fiscal year 2008-09 which was projected by the caretaker government as 6. %. They argued that readymade garments and remittance inflow will suffer due to global financial crisis which will lead to decline in GDP growth rate. Though the caretaker government and the governor of Bangladesh Bank is at variance with the World Bank, it indicates that they do not like to see the gravity of the financial crisis. However, if the new government looks at the gravity of the financial crisis very lightly, then it will be very harmful for the nation. BB governor hopeful of 6pc growth despite grim WB, IMF forecast