Economy hits rough patch: MCCI | The Daily Star
12:00 AM, November 17, 2011 / LAST MODIFIED: 12:00 AM, November 17, 2011

Economy hits rough patch: MCCI

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The economy is going through some strains that may further deepen in the coming months, said a leading business body yesterday.
In its economic review for July-September, the Metropolitan Chamber of Commerce and Industry (MCCI) has identified soaring inflation, growing subsidy needs, depreciation of the taka, stagnant investment, rising budget deficit and heavy bank borrowing as major challenges for the current fiscal year.
MCCI found economic growth targeted at 7 percent and 8 percent for fiscal 2011-12 and 2012-13 respectively would depend on the government's success in addressing these challenges.
The report incorporated an analysis on the first quarter's economic performance and forecast on the macro-economy, as well as trends in the financial markets.
The analysis found though the overall performance of the economy was relatively better than many other countries it has recently been going through adverse situation, now evident in different economic indicators.
“The challenges for the government will be to properly address these problems,” MCCI said.
Its analysis also found high oil import because of the fuel requirement of rental power plants is posing a big challenge for the economy as this is drawing down the foreign exchange reserves.
Bangladesh's foreign exchange reserves went down to $9.7 billion from $11 billion last year.
MCCI said the condition of physical infrastructure remains weak, which together with the crisis in the power and gas sectors, acts as a bottleneck to achieving the much-needed foreign investment.
Declining remittance growth, deteriorating balance of payments, poor public investment and volatility in the capital market were also identified as challenges.
Nearly a year has elapsed since the collapse of the market after an unprecedented bull run but there is little sign of its recovery, said the chamber.
Despite these challenges, MCCI found some encouraging factors in the economy. These are: good farm output, a rise in industrial term loans and import of capital machinery and raw materials.
Nearly 23 percent growth in export in July-September period also indicates an increase in production in the manufacturing sector, according to the MCCI report.
Small and medium industries that performed poorly in the previous quarters also did better in the quarter under review, MCCI said.
“With the expansion of SME loans by banks, production of SMEs has also increased considerably,” the chamber said.

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