Political turmoil cost economy Tk 110bn loss: WB

Polls-related political turmoil has cost Bangladesh’s economy a total value added loss of $1.4 billion in the 2013-14 fiscal, the World Bank has said.

It has also projected a 5.4 percent GDP growth rate in FY 2014, but says this rate is more than those of the neighbouring countries.

The Washington-based lender’s Dhaka office published ‘The Bangladesh Development Update’ at a press briefing on Wednesday.

Its Lead Economist Dr Zahid Hussain said the current fiscal saw 45 days of nation-wide general strikes and blockades, costing Bangladesh an estimated $1.4 billion, or Tk 110 billion in losses.

“This is only in production loss including the losses of all sectors. Of the total, 86 percent was in services sector, 11 percent in industry and 3 percent in agriculture,” he said.

The Centre for Policy Dialogue (CPD) in December last year said that Bangladesh had lost around Tk 490 billion to political turmoil.

The incumbent government, too, admitted recently that the targeted growth would not be possible to achieve. It also revised the growth target downward to 6.5 percent from 7.2 percent because of a long spell of political unrest before the Jan 5 parliamentary elections.

But, some institutions have doubted Bangladesh’s ability to even achieve the revised target. Earlier, the Asian Development Bank had hinted at a 5.6 percent growth, while the International Monetary Fund pegged it below 6 percent.

The World Bank in November last year had projected a 6.7 percent growth, but now it has lowered the bar to 5.4 percent.

The development update, however, said the current growth remained resilient despite political turbulence and declining remittances.

It said GDP growth could rise and stay above 6 percent if it was supported by stability, investment in roads, power and reforms.

Dr Hussain held falling remittance and earnings from exports responsible for the decrease in growth.

But the 5.4 percent growth is not unsatisfactory at all, he noted, and explained that since Bangladesh so far saw 6 percent growth, the projected rate might seem too little.

The economist added, “The World Bank thinks the growth is satisfactory compared to the neighbouring countries except Sri Lanka.”

The WB has projected India’s GDP growth at 4.8 percent, 3.8 percent for Nepal, 3.4 percent for Pakistan, and 7.4 percent for Sri Lanka.

Hussain also suggested Bangladesh government hiked the gas prices. “There is a crisis of gas. (Gas) should be used wisely. There is no alternative to hiking the prices.”

The WB report said the inflation rate, which is a moderate single digit one, was still higher than the rates in the neighbouring countries.

According to the Bangladesh Bureau of Statistics, the point-to-point inflation was at 7.48 percent in March.