Published: Sunday, June 2, 2013

Govt sets sights on ambitious GDP growth

Officials say economy to improve after polls; inflation target may be lowered

Govt sets sights on ambitious GDP growth The government is going to set a higher GDP growth target for the next fiscal year although the achievements in the current fiscal year were far below expectations amid challenges on both domestic and global fronts.
The GDP growth target for the current year was 7.2 percent but, according to provisional estimate of the Bangladesh Bureau of Statistics, the growth was finally 6.03 percent.
The government will maintain the same growth target — 7.2 percent — in the next fiscal year, Finance Minister AMA Muhith told The Daily Star on Friday.
The government also plans to set a lower inflation target — 7 percent on an average basis — for the next fiscal year, while the target in the current year was 7.5 percent.
However, the finance minister has differed with the BBS provisional estimate on growth.
He said the GDP (gross domestic product) growth in the current fiscal year will, in no way, be lower than that of the last fiscal year, rather it may reach 6.8 percent.
Last year, the agency put the growth figure at 6.23 percent, down from the provisional estimate at 6.32 percent.
Political unrest at home and slow recovery of global economy, especially the US and Eurozone, have cast a gloom over the GDP growth of Bangladesh, a finance ministry official said.
But the global recovery will expedite next year, the official said, citing reports of the International Monetary Fund.
The domestic political environment will also improve after the next national election in December, and investors, who now take a wait-and-see stance, will go for fresh investment, leading to higher growth, he said.
The government will spend much of the budgetary allocations to attract voters in the run up to the election, which will increase public investment and boost domestic demand, the official added.
The finance minister said political instability is the biggest challenge for the coming days but budget implem
entation will continue in full swing until the end of the present government’s tenure.
If the present government returns to power, it will start implementing some big infrastructure projects, including the Padma Bridge, which would also help raise the GDP growth, another official of the same ministry said.
One of the major electoral pledges of the present government was to keep the prices of essentials at a tolerable level.
Inflation had been at a lower level during the first few months of the current government, but the rate had started to rise since 2010.
Inflation, on an average basis, had crossed double digit in 2011, but now it has started to come down again. In June last year, the figure was 10.62 percent, which declined to 7.85 percent in April this year, close to the government’s target for the current fiscal year.
The finance ministry officials said they hope to meet the target for the next fiscal year if farm production remains higher like the previous years and prices do not go up on the international market.