Boosting economic growth and investments will be the biggest challenges for the government in the upcoming fiscal year, the Metropolitan Chamber of Commerce and Industry said yesterday.
“There is no alternative to raising the level of investment,” the country's oldest chamber said in its review of the third quarter of fiscal 2013-14.
The sixth five-year plan targeted achieving an 8 percent GDP growth rate by 2015, but it would require the economy's total investment to grow from the present 26-27 percent of GDP to 32.5 percent.
“All-out efforts will therefore be needed to encourage private investment, enhance public investment and attract foreign direct investment.”
All donor agencies have revised down their forecast of GDP growth forecast for this fiscal year to between 5.4-5.6 percent from the government's original growth target of 7.2 percent and the revised target of 6.5 percent, due to political unrest, weak external and domestic demand, and poor infrastructure.
While the government is doing its best to heal the economy from the destruction caused by the political turmoil, restore growth momentum and rebuild the confidence of local industrialists and businessman as well as foreign buyers and investors, more needs to be done, the report said.
Specifically, the government needs to urgently address the shortages of power and gas, due to which production in manufacturing industries, which contribute nearly 20 percent to GDP, is now well below their capacities, it said, adding that the sector recorded a slow growth in the third quarter.
The report, however, said the power supply situation improved during the quarter. The demand for power shot up due to the rising temperature and the ICC T20 World Cup cricket, but the Bangladesh Power Development Board took special measures to produce adequate power during the sporting event.
As of March 31, total actual generation during peak hours was 7,155 megawatts against the actual demand of 6,603mw. The maximum generation in 2014 was 7,356mw on March 30 and it was also the maximum generation in BPDB's history. The installed capacity of power plants as of April is 10,241mw.
The construction sector experienced problems between the months of January and March despite an apparent improvement in political situation since the January 5 election.
A continued downtrend in sales severely affected the realtors, which also has had its incidental effects on the overall economy, according to MCCI.
“The realtors are offering their lowest ever prices to clear their backlog and roll their investment, but still there is no positive response from the buyers.”
Rebuilding the image of the garment sector that accounts for nearly 80 percent of the country's total exports will be another tough task, according to the chamber.
The agriculture sector, which contributes to 18.7 percent of the GDP, bounced back from the setback suffered in the second quarter due to political turmoil, performing “reasonably well” during the January-March period.
With continuing policy support from the government to ensure easy and timely availability of agricultural inputs and fair price to farmers for their produce, the target set for food grain production this fiscal year should not be difficult to achieve, it said.
The external environment is also turning favourable with the recovery of the country's major trade partners, noted the MCCI.
“The most important challenge for government is to restore political stability, without which GDP growth will falter and it will be difficult to reap full gains from the global economic recovery.”