WB says GDP growth to slow down to 5.7pc for pol turmoil

WB says GDP growth to slow down to 5.7pc for pol turmoil

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The World Bank on Wednesday projected that Bangladesh’s GDP growth rate will slow down to 5.7 percent in the fiscal 2013-14 due to political turmoil. The global lender came up with the observation at a media briefing on Bangladesh Development Update at its Dhaka office. It also said if the European Union decides to truncate or suspend GSP facilities to Bangladesh, there may be export loss from 4.1 percent to 8.1 percent of the total exports. The World Bank, however, said the direct impact of the suspension of GSP facilities by the USA is negligible. Referring to the forex reserve, the World Bank said the current reserve level is adequate, but not excessive. Presenting the Bangladesh Development update October -2013, lead economist of World Bank’s Dhaka Office Dr Zahid Hussain said the GDP growth in fiscal year 2012-13 decelerated, for the second year in a row, to six percent. “Disruption caused by political strife, deepening political tension relating to the impending political transition and the inadequate improvement in the provision of power, gas and infrastructure were the key sectors in the growth slow down,” he added. Zahid also said the most pressing challenges lie in rebuilding the image of the garment sector, removing supply bottlenecks and maintaining economic and financial reforms. The World Bank suggested that the government give the most immediate priority to ensure enforcement of the steps suggested by foreign buyers, international agencies and domestic regulatory bodies. According to the update report, the global risks to the country’s economy have receded, but internal risks grown in stature due to political instability. The six percent growth in the 2012-2013 fiscal year came largely from construction and manufacturing, but the slower growth reflects on both agricultural and service sectors. The agricultural output growth weakened to 2.2 percent in FY 13 from 3.1 percent in FY 12, primarily because of stagnant cereal crop production, while the services growth came down to 6.06 percent in FY 13 from 6.3 percent in FY 12, suffering most from the direct impact of strikes and political violence. The report said inflation decelerated but remained high with annual average inflation declining from 8.7 percent in FY 12 to 6.8 percent in FY 13, which reflects a decline in both food and non-food prices. The export gained momentum in the last fiscal year. Total exports increased by 11.2 percent in FY 13 compared with 5.9 percent growth in FY 12 while inward remittance grew by 12.6 percent, compared with 10.2 percent in FY 12. Real private investment has declined by 1.2 percent in the last fiscal year as investors discouraged by political turmoil and uncertainty, compliance failures and labour unrest in the RMG sector, banking scams and a lackluster global economy. The financial system remains under stress and capital market activities have been weak. Several financial scams and resultant loan defaults in the state-owned commercial banks moved them into a position of insolvency. Capital market activities remained generally weak throughout FY 13, the update report noted. WB Country Director for Bangladesh and Nepal Johannes Zutt also spoke at the briefing while its another lead economist Salman Zaidi was present. – UNB

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