WB lists reasons for economic shocks | The Daily Star
12:00 AM, June 14, 2012 / LAST MODIFIED: 12:00 AM, June 14, 2012

WB lists reasons for economic shocks

It forecasts Bangladesh's GDP growth at 6.4pc next fiscal year

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The World Bank has identified a number of reasons that dealt a blow to Bangladesh economy.
The reasons include political turmoil and periodic strikes, widespread electricity shortages, near double-digit inflation, fiscal deficit and deteriorating external balances.
Bangladesh's economic growth may be 6.4 percent in the next fiscal year, the lender said in its Global Economic Prospects June 2012 released worldwide on Tuesday.
In the current fiscal year, the government has estimated the GDP (gross domestic product) growth rate at 6.3 percent, down from 6.7 percent last year.
The WB report also said exports have been affected by weaker demands from key European trade partners, while infrastructure constraints, especially electricity shortages, have become acute, partly due to higher crude oil prices.
It also said agriculture output growth is also estimated to have slowed to less than 2 percent in the current fiscal year from the previous fiscal year's 5.1 percent. But a good crop harvest is expected for the current agriculture season due to favourable weather, the WB said.
The report said monetary tightening and easing of food inflation are likely to continue to put a downward pressure on the overall inflation.
Non-food inflation, however, remains persistently high partly due to the still-high costs of imported inputs and pressure from a huge government spending.
The report also said South Asian countries, including Bangladesh, may require a significant upward adjustment to the international fuel prices to ease the pressure on subsidy.
The WB said, even after recent price hikes in Bangladesh and Sri Lanka, energy products are still subsidised to some extent.
Moreover, election schedules in the coming two years in several south Asian countries and an intention to protect consumers from the inflationary impact of higher fuel prices could make it difficult for the governments to reduce subsidies and raise the oil prices, it said.

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