“I believe the GDP growth is reducing 0.5 percent or 0.6 percent due to political instability,” he said at the launching of the UN ESCAP's Economic and Social Survey for Asia and the Pacific in Dhaka on Thursday.
Global lending agencies are predicting a below 6 percent growth this fiscal which is something new for Bangladesh that witnessed robust growth even during the global economic recession.
Islam said there was ‘no doubt’ about the negative impact of political instability. “It hampers exports, it hampers production, it hampers transport.”
He said even around 6 percent growth would put Bangladesh as one of the 14 countries in the Asia and Pacific.
“But the problem is that we are moving away from our desired goal to be a middle-income country. We need more than 7 percent growth for that,” he observed.
The ESCAP 2013 report suggested ‘forward-looking macroeconomic policies for inclusive and sustainable development’.
It predicts 6 percent economic growth for Bangladesh this fiscal that Bangladesh Institute of Development Studies’ Director General Mustafa K Mujeri said was estimated in December when the political situation was ‘not that much volatile’.
Presenting the report, he said it suggested investing in ‘inclusive and sustainable’ development in 10 Asia-Pacific countries including Bangladesh.
According to the report, Bangladesh has to invest 22 percent of its GDP for a package of development schemes that include a job guarantee programme, a universal non-contributory pension for all aged above 65, benefits to all persons with disabilities, increasing the share of public health expenditures and universal enrolment of primary education.
Former advisor Islam, however, said it would be hard for Bangladesh to invest 22 percent of GDP for the package. “What the government can do is increase tax revenue collection.”
Speaking at the launch, UN Resident Coordinator Neal Walker said a lot needed to be done to ensure sustainability of economic growth.
Reading the report, he said, he found that Bangladesh had to “increase tax revenue collections, improve political stability, continue to make investment in education, health and infrastructure, address corruption and ensure the county is committed to sustainable management of natural resources”.
Walker suggested increasing tax revenues by increasing the level of collections. “We simply cannot make the necessary investment when tax collection rate is so low.”
He also said that political parties ‘often ignore and underestimate’ the economic impact of the current political impasse.
“It will really be good to see them speaking towards the conditions for elections and deciding the kinds of election-time government and specifically reject violence to improve overall environment for economic investment,” he said.
The UN Resident Coordinator termed corruption ‘a long standing historical plague’ for Bangladesh and said it should be ‘effectively’ managed so that infrastructures were being built ‘to the level of quality necessary to remain functional beyond one year.’
He stressed on politicians’ personal commitment for ‘eliminating’ corruption.
The Economic and Social Survey of Asia and the Pacific is the oldest and most comprehensive annual review of economic and social development in Asia and the Pacific.
It outlines policies to sustain dynamic growth and to make it inclusive such as boosting internal demand, enhancing connectivity to create a seamless and region-wide market, and building productive capacities in the least developed countries.