Export, remittance to rise: MCCI
The Metropolitan Chamber of Commerce and Industry has predicted that export, import and remittance are expected to rise in the third quarter this fiscal year, riding on the prevailing political calm.
The chamber body also said the foreign exchange reserve will fall in January-March, which is a regular annual feature that arises for payments against imports. The rate of inflation is likely to climb because both fuel and non-fuel commodity prices are on the rise in global markets, it added.
MCCI made the forecast in its quarterly review of the economy for October-December this fiscal year.
It said the rising current account deficit is a matter of concern for the economy as it may hit the overall balance of payments (BoP) position.
The current account deficit was at its highest level in the country's history during July-November of FY17, it said.
Current account deficit surged to $726 million during July-November quarter of the current fiscal year. The last time the current account experienced a large deficit ($447 million) was five years ago.
A current account becomes a deficit when the value of imports of goods, services and investment incomes are greater than the value of exports.
Quoting experts, MCCI attributed the widening deficit on the fall in remittance and lower than expected export receipts.
The BoP also declined by $141 million or nearly 7 percent to $1.903 billion in the first five months of the current fiscal year, down from $2.044 billion in the corresponding period last year.
MCCI said Bangladesh has plenty of opportunities to achieve a higher GDP growth this fiscal year than the 7.11 percent achieved last year.
Manufacturing activities showed signs of improvement, thanks to a peaceful political scene in the country, said the business body. The manufacturing sub-sector grew 11.69 percent in FY16, 1.38 percentage points higher than 10.31 percent in the previous fiscal year. The large and medium scale industries sub-sector performed much better than the small scale industries.
The services sector performed better, compared to the previous fiscal year. Despite a sluggish investment situation, growth of the services sector increased by 0.45 percentage points to 6.25 percent in FY16 from 5.8 percent in FY15.
However, the chamber body said to achieve the target of becoming a middle-income country by 2021, the government will need to increase the rate of economic growth, accelerate exports, attract more investment and improve the overall infrastructure.
The government will have to improve the country's road and rail infrastructure, develop port facilities, increase power and gas production, and remove other infrastructure bottlenecks to achieve higher growth.
At the same time, impediments such as the delay in execution of development projects, lack of skilled manpower and absence of decentralised government administration must be removed to restore the confidence of the country's business and investor community.