Bangladesh economy to grow by 6.5 percent in FY 2015-16, says World Bank

The government has said it is expecting a 7 percent GDP growth this fiscal.

The World Bank's Dhaka office released its report 'Bangladesh Development Update' on Tuesday, suggesting that the government should boost private sector investments.

In its ‘Global Economic Prospects’ report, released in June this year, the WB said that growth of Bangladesh’s gross domestic product (GDP) in FY 2015-16 would not exceed 6.3 percent.

It had also said then that political instability would have adverse impact on the economy.

But recently, World Bank's Chief Economist Kaushik Basu had told bdnews24.com that Bangladesh economic growth was 'astonishing', especially when the global economy was facing a downturn.

The Asian Development Bank (ADB), however, had said that a 6.7 percent growth was achievable for Bangladesh in this fiscal.

In its ‘Asian Development Outlook 2015’, released last month, it said political stability, increased spending on public and private sectors and rising export incomes as well as remittances will help Bangladesh attain a 6.7 percent GDP growth.

Bangladesh has set a 7 percent GDP growth target in the 2015-16 FY budget and Finance Minister AMA Muhith insists it’s possible to achieve.

The World Bank’s Dhaka office Lead Economist Zahid Hussain, however, told the press conference on Tuesday that there was ‘no certainty’ that political stability would continue in Bangladesh.

The ‘uncertainty’ over political stability forced the growth to depend on the rise in demand and export earnings, he said.

Production, along with purchasing power and demand, would increase following the pay rise of government officials, Hussain argued.

According to the report, 9 percentage points will be added to the GDP growth because of this.

It would be possible to achieve even 7 percent growth if there was much investment in the private sector, he added.

Hussain also said Bangladesh’s economic condition was stable now thanks to the stability in microeconomic indicators, controlled inflation, high reserves of foreign exchange, and less government borrowing from the banks.

But, he said, Bangladesh had a reason to be concerned over its lack of ability to compete in the international market.

The flow of remittance dropped 2 percent in July-September than the same period last year due to falling manpower export.

The report said Bangladesh saw an average growth of 6.2 percent from 2010 to 2015, which was more than Indonesia, Pakistan and Vietnam but less than China, India and Sri Lanka.

The World Bank’s outgoing Resident Representative Johannes Zutt also spoke. His tenure ends on Oct 30.