The Asian Development Bank (ADB) country director in Dhaka has said Bangladesh has the potential to achieve 7 percent or more economic growth a year, despite challenges of political uncertainty, weak infrastructure and vulnerability to natural disaster.

"Political stability is fundamental for economic growth and the economy will not be sustained without a stable political base," Hua Du told a press briefing yesterday while releasing the Bangladesh Quarterly Economic Update March 2008.

Hua Du is leaving next month after ending her four-year tenure as the ADB country director in Bangladesh.

The Quarterly report identified weak infrastructure, including serious power shortages, as serious obstacle to the country's economic growth apart from political uncertainty leading up to the December 2008 elections. Oil and food grain prices increase in the international market also posed significant risks, it said.

The report said Bangladesh's GDP is expected to grow by 6 percent in FY2008, down from 6.5 percent in FY2007 because of moderate agriculture growth following the extensive flooding and cyclone.

It said fear and uncertainty among the investor community, apparently created by the government's comprehensive anticorruption drives, have started to ease.

The ADB quarterly said a major global report (by the PricewaterhouseCoopers) identified 13 emerging economies, including Argentina, Bangladesh, Egypt, Iran, Malaysia, Nigeria, Pakistan, the Philippines, Poland, Saudi Arabia, South Africa, Thailand and Vietnam, as having the potential to grow faster.

The report concludes that long-term prospects of these countries are upbeat in addition to major emerging economies including Brazil, India, Indonesia, Mexico, China, Russia and Turkey.

The global centre for economic activity is already shifting to India, China and other large emerging economies, and Bangladesh must make all efforts to capitalise on its comparative advantages to benefit from this global paradigm shift, said the report.

On food price shocks in Bangladesh, the ADB report said market surplus of available food grains is estimated at 3.6 million tonnes in Fy2008.

The ADB observed that although domestic food grain prices are expected to moderate somewhat, high food prices are expected to persist in the foreseeable future. "Despite a bumper boro crop, risks of a supply shortage are possible if the next aman and boro crops are affected by natural disasters or other factors," it said.

"In that case, the shortfall will have to be offset by buffer stocks through higher imports," the report said.

Rapidly growing prices of food, mainly rice, seriously curtailed the purchasing capacity of the people living below the poverty line and the government employees, industrial workers and others with fixed income.

The focus of policy responses should be on targeted interventions to protect the poor and vulnerable in the face of rising food prices, the report remarked.

When asked about her experiences in Bangladesh in the last four years, Hua Du said Bangladesh people's hard work, friendly attitude and hospitability attracted her most.

"I have also noticed people's resilience here, specially the way they recovered from natural disaster is simply remarkable," she said.

She also suggested the government focus on governance issues for country's development. "Governance is also related to the improvement in efficiency," she added.