The World Bank has projected 5.9 percent growth for the country in fiscal 2014-15, far below the government's target of 7.3 percent.
The forecast is in line with potential growth, the multilateral lender said in the Global Economic Prospects report released yesterday.
The figure is higher than that forecast for its South Asian neighbours save for India, which is expected to grow at 6.3 percent. The projection for South Asia, excluding India, is 5.1 percent and for developing countries 4.8 percent. “If you compare the global and regional economy, the growth forecast for Bangladesh is good,” said Zahid Hussain, lead economist of WB's Dhaka office.
The global economy is projected to expand by 2.8 percent this year, strengthening to 3.4 percent and 3.5 percent in 2015 and 2016. The Euro area is on target to grow by 1.1 percent this year, while the US economy is expected to grow by 2.1 percent.
China is expected to grow by 7.6 percent this year, but this will depend on the success of rebalancing efforts. If a hard landing occurs, the reverberations across Asia would be widely felt, the report said.
Hussain said an uncertainty has been prevailing among investors over political stability or rather lack of it.
“Investment is slow. The garment sector is going through a transitional period and remittance growth is also sluggish. Considering all these factors, the World Bank's GDP growth forecast is reasonable,” he added.
“I have been seeing for the last five years that the economic forecasts made for us by the World Bank and other multilateral agencies never came true. I think we will achieve high growth next year as well,” said Shamsul Alam, member of the General Economics Division of the planning ministry.
In the country's sixth five year plan, the target was to cross 8 percent in fiscal 2014-15, but due to the overall environment it was brought down to around 7 percent, he added.
“We hope that in the next fiscal year, investment, export and remittance flow will increase as it is expected that the global economy will experience accelerated growth,” Finance Minister AMA Muhith said in his budget speech.
During this period, food and energy prices in the international market are likely to decline slightly. Besides, an investment-friendly monetary policy will be maintained ensuring uninterrupted credit flows to the productive sectors, he added.
The government initiatives for developing physical infrastructure in the power, energy and communication sectors will continue.
Banking on favourable weather and political stability, Muhith is hopeful of achieving the GDP target of 7.3 percent for next fiscal year.
“I will not enter the debate on whether the GDP growth will cross the 6 percent-mark or not,” said Mustafizur Rahman, executive director of the Centre for Policy Dialogue.
The Bangladesh Bureau of Statistics has estimated 6.1 percent growth for the current fiscal year.
GDP growth depends on a number of factors, he said. “How will the political environment be? Will the slow loan growth accelerate? Will the agricultural sector be hit by natural calamity?”
The CPD executive director, however, said the low commodity, fuel and cotton prices in the international market are all favourable for achieving a good GDP growth figure.
12:01 AM, June 12, 2014 / LAST MODIFIED: 01:53 AM, March 08, 2015