ADB predicts 6.4% GDP growth

The Asian Development Bank has predicted a 6.4 percent growth for the Bangladesh economy, dismissing the government’s 7.3 percent growth target for the current fiscal.

It will be possible to achieve 6.4 percent growth because the economic foundations of Bangladesh are robust, the Manila-based lender said in the report - Asian Development Outlook-2014 - released at a press briefing on Thursday.

ADB’s Principal Country Economist at Dhaka Mohammad Zahid Hossain elaborated on different aspects of the report.

Most of the economic indicators such as export earnings, remittance, foreign currency reserve and imports in Bangladesh were ‘positive’, he said.

“We are seeing very positive prospects for Bangladesh,” said Hossain.

But more growth is needed in the current context, he said, “which will be possible if political stability is maintained and investors feel more confident”.

“Investment has increased from the last fiscal. Import of capital machineries and industrial raw materials has increased. All these are positives,” he said.

The report predicted average inflation to drop from 7.4 percent to 6.5 percent.

Inflation in Bangladesh will stay at tolerable levels because of steady food and fuel prices in the international market. ADB also predicted a surplus in current account.

The government is targeting a 7.3 percent GDP growth this fiscal. The Bureau of Statistics says the economy grew by 6.12 percent in the last fiscal.

The ADB report said growth in the agricultural sector could increase to 3.5 percent this fiscal from the previous 3.3 percent, thanks to the government’s policy support.

It said industrial growth could also increase to 9.2 percent from 8.4 percent, and the service sector to 8.9 percent from 5.8 percent.

The report said exports of goods and their domestic demand would increase due to high industrial and agricultural growth.

ADB predicted 13 percent increase in export earnings over the previous fiscal’s figure.

The report observed that export earnings attainted a high growth rate in the last six months of the 2013-14 fiscal and added the trend would continue.

It said a rise in wages and several factory safety measures had helped Bangladesh’s readymade garment industries regain foreign buyers’ confidence.

It will have a positive impact on exports, it added.

Export earnings increased by 12 percent in the 2013-14 fiscal over the previous fiscal.

The ADB report said remittance inflow might see a 7 percent rise this fiscal.

Remittance had dropped by 1.2 percent last fiscal, it said, adding that, though the inflow maintained downward trend in the first six months, it reversed in the fiscal’s second half.

ADB economists think the trend of last fiscal’s second half might continue in the current one as well.

Sending Bangladeshi workers abroad at low cost will have a ‘positive impact’ on remittance.

The report identified some risks in Bangladesh’s economy, which included political unrest and natural disasters.

It said the government’s development activities might be affected if ‘adequate’ revenue was not collected and foreign aid released.

It feared that inflation would rise if the government’s borrowing from the banking sector were to increase.