Economy growing well but below potential: MCCI
Bangladesh's agriculture, services and manufacturing sectors have performed well in the just concluded fiscal year but need more support to boost the economy in the coming days, said the Metropolitan Chamber of Commerce and Industry, Dhaka (MCCI).
“The economy is progressing well, but below its true potential,” said the oldest chamber in the country.
It made the observations in its quarterly review of the economic situation of Bangladesh for April-June of 2017.
According to the review, the agriculture sector employed about 47.5 percent of the labour force and accounted for about 14.79 percent of the gross domestic product (GDP).
The sector grew 3.4 percent in fiscal 2016-17 compared to 2.79 percent in fiscal 2015-16, thanks to strong government support in terms of timely availability of inputs and finance.
The industrial sector grew 10.5 percent, 0.59 percentage points lower than that in the previous fiscal year.
However, the share of the industrial sector in GDP increased 0.94 percentage points to 32.48 percent from 31.54 percent in fiscal 2015-16.
The services sector performed better last fiscal year compared to the previous year.
Despite investment being sluggish in the quarter under review, the services sector's growth rose 0.25 percentage points to 6.50 percent in fiscal 2016-17 from 6.25 percent in fiscal 2015-16.
In fiscal 2016-17, the agriculture sector also performed well, but continuous government support with inputs and finance will be needed to sustain the growth, said the MCCI.
The review said the services and manufacturing sectors are also doing well but they will need government support in different fields.
In particular, infrastructure deficit and gas and power supply problems were undermining the performance of all productive sectors.
The government will need to adopt suitable measures to remove bottlenecks in order to support the growth.
The MCCI said some risk factors such as negative growth in remittance, marginal growth in export receipts and higher inflationary pressures were present in the economy.
But the overall economic situation was positive. “The country experienced stable growth. Inflation was a bit higher but under control. The exchange rate remained stable and foreign exchange reserves rose to a comfortable level.”
The MCCI said it was assuming that the peaceful political situation that currently prevailed would continue in the coming days. “Therefore, export, import and remittance will increase further.”
It said the foreign exchange reserves are likely to fall in July and September due to the payment to the Asian Clearing Union against imports. The rate of inflation may go up because of increased demand ahead of and during Eid-ul-Azha.
The review said inadequate infrastructure, a lack of investor confidence in the economy that discourages fresh investments and a shortage of power and energy are now the major impediments to the country's development.
“These impediments must be removed to restore the confidence of the country's business and investor community.”