Published: Friday, May 17, 2013

GDP growth falls to four-year low

GDP growth falls to four-year low

Bangladesh’s GDP growth came down to 6.03 percent in the current fiscal year, the lowest in four years, due to low investment and deadly political unrest, according to provisional estimates.
The economic growth is much lower than the government’s target at 7.2 percent.
The growth in economic expansion is, however, higher than the forecasts of development agencies who said the rate would hover between 5.5 percent and 5.8 percent.
The estimates were made on the basis of available data of the first nine/ten months of the current year and the trends for the rest of the months.
The country has scored 20 basis points less than the last fiscal year’s growth, according to Bangladesh Bureau of Statistics.
The final GDP achievement went down last fiscal year to 6.23 percent, which was 6.32 percent in the interim.
However, economists were not surprised at this year’s growth rate.
Zaid Bakht, a research director at Bangladesh Institute of Development Studies, said: “We had forecast long ago that the target would not be achieved this fiscal year due to political instability and low investment.”
“It’s, however, encouraging that the growth remains over 6 percent,” he told The Daily Star, giving credit to the steady growth in exports and better implementation of the annual development programme by the government.
The economist said remittances also helped indirectly keep the growth at a much higher level, which boosted domestic demand.
However, the final estimates would show whether the country would be able to retain the provisional figure, Bakht said.
“It will depend on the political situation in the rest of the months of the current fiscal year.
Hassan Zaman, chief economist at Bangladesh Bank, said: “The 6 percent growth outcome is not a surprise and is very close to what Bangladesh Bank had forecast back in December.”
“On one hand, it is higher than the Indian and developing country average projected growth of between 5-5.5 percent, but at the same time we know that had the domestic investment climate not deteriorated since January, we could easily have achieved our last ten years average of 6.2 percent growth.”
The economist said the focus should now be on setting a realistic growth target for the fiscal year of 2013-14 in the upcoming budget and collectively ensuring the stability that is required for investment and growth to take place.
The World Bank had said in April that weak exports and investments resulting from the impact of the euro-area crisis, domestic supply constraints and intensified strikes and unrest underpin the growth slowdown.
In the current fiscal year, the agriculture sector grew by 1.18 percent, down from 2.46 percent last year, according to the statistical agency.
The manufacturing sector lost 0.02 percentage points to grow at 9.34 percent this year.
Electricity, gas and water supply made a fall, as their growth altogether declined to 8.57 percent from 12.03 percent last year.
In the services sector, the wholesale and retail trade sub-sectors saw a decline in growth by 0.94 percentage points to 4.69 percent.
The construction, transport and real estate sectors rose slightly.