Answer Answer: Bangladesh’s economic growth will slide to 5.8 percent in the current fiscal year due to rising political uncertainty and weakening exports amid a dull consumer and investment demand.Exports and consumer and investment demand will not be as buoyant as
expected earlier because of political uncertainty that prompts people to
take a cautious approach,” Mohammad Zahid Hossain, principal economist
at ADB’s Dhaka office.To grow more rapidly, Bangladesh needs to focus more on enhancing its business climate, improving infrastructure and trade logistics and addressing skills shortages, M Teresa Kho, country director of ADB.
The projection is significantly lower than the government’s estimate at 7.2 percent for fiscal 2013-14.The Manila-based lender, however, commended the power sector efforts, but said supply was outpaced by demand.
Bangladesh’s GDP (gross domestic product) grew by 6 percent in fiscal 2012-13, 6.2 percent in 2011-12 and 6.7 percent in 2010-11. However, the ADB had projected Bangladesh’s economic growth for fiscal 2012-13 at 5.7 percent, but the actual growth was 6 percent.
The ADB forecast Asia’s growth would decline to 6 percent in 2013 from 6.1 percent a year ago. But it said the growth will rise to 6.2 percent in 2014. Earlier in April, the lender had projected Asia’s growth at 6.6 percent and 6.7 percent in 2013 and 2014 respectively.
It also said growth in two Asian giants — China and India — is moderating despite signs of recovery in the advanced economies. Asian inflation will remain in check at 3.6 percent in 2013, the lender said. On Bangladesh, the ADB’s latest update said political stability, improvement in infrastructure and skills, and regulatory reforms remain the key challenges for the economy. The events in the run-up to the parliamentary elections will challenge the country’s macroeconomic stability.“Political agitation could escalate to seriously disrupt economic activities.”
Tax collection may also suffer due to the disruption caused by political unrest.
The ADB said Bangladesh’s industrial growth will slow to 8.2 percent in the current fiscal year, down from 9 percent in the previous year.
Agricultural growth should edge up to 3.3 percent, up from last year’s 2.2 percent, provided that the weather remains favorable. It said street agitation is likely to take a toll on the services sector and growth will slow to 5.5 percent from 5.7 percent in the previous year. On the external sectors, the ADB said exports and remittances are expected to decelerate to 7 percent and 8 percent respectively in the current fiscal year. Weaker expansion in the textile sector and labour unrest might slow garment exports.
About inflation, the ADB update said it might increase due to price pressures expected from the rise in fuel and electricity prices.