World Bank Country Director Johannes Zutt and lead economist of World Bank Bangladesh Zahid Hussain present a report titled “Bangladesh Development Update” at the WB headquarters at Agargaon in the capital. Photo: TV Grab
The World Bank has forecast lower gross domestic product (GDP) in the current fiscal year amid volatile political situation and low investment.
If internal strike in the industry, alongside the ongoing political disruption continues in the coming days, the GDP growth might be even lower than the forecast, Zahid Hussain, the lead economist of World Bank Bangladesh, said while presenting the report.
The report on WB's quarterly economic update titled 'Bangladesh Development Update' was presented by Johannes Zutt, World Bank's country director for Bangladesh, at WB country office today.
The report forecasts a GDP growth of 5.7 percent for this fiscal, which is 0.33 percentage point less from the last FY’s 6.03 percent.
“Economy is moving into a more volatile phase,” said Hussain.
“Risks stemming from the impending political transition have grown significantly while new risk and challenges have gained prominence including notably the risk associated with the damaging image of Bangladesh’s major manufacturing success story- the garment industry,” he added.
“Garment industry has played a major role in Bangladesh’s strong economic growth, but this industry is now at a critical crossword,” Zutt said stressing the importance of the garment industry in the country’s economy.
"Recent high fatality factory fires and building collapses have exposed the hazards workers face and severely tarnished the industry’s image,” the country director added.
He also warned that if immediate measures are not taken, then in the case of EU suspending its GSP facility to Bangladesh, the country could see its total exports fall by “as much as 4.1 to 8 percent”.
He also said that the World Bank wants a democratic government in Bangladesh, elected through a fair election, in reply to a query from journalists during the event.
On Tuesday, international credit rating agency Moody’s Investors Service warned that the escalating political turmoil in the run up to the national elections may weigh on Bangladesh’s sovereign rating and eventually hurt its economy.
One of the two top international rating agencies that prepare credit ratings on Bangladesh, Moody’s noted that the election tension among major political parties was different this time as Islamist forces had emerged as an additional risk in this otherwise secular state.
The International Monetary Fund (IMF) also forecast similar lower GDP in its study titled ‘World Economic Outlook’ on October 9.
The multilateral lender tipped the country’s GDP to grow at 5.8 percent in 2013 and 6 percent in 2014 during its annual meeting of the World Bank and IMF held in Washington.
For fiscal 2013-14, the IMF forecast the GDP growth to be 5.5 percent, significantly less than the government target of 7.2 percent.