Bangladesh has registered its highest ever economic growth, of 7.24 percent, this fiscal year -- the second year in a row in which the country managed to break out of its decade-long 6 percent growth trap.

The economy grew at 7.11 percent last fiscal year.

“This is a great success. This is the contribution of all in this country,” said Planning Minister Mostafa Kamal quoting Prime Minister Sheikh Hasina at the National Economic Council meeting yesterday.

Bangladesh is now one of the top growing countries in the world, he said. “We are just behind India in terms of economic growth.”

For the incoming fiscal year, the government has set the growth target at 7.4 percent growth.  “Our ultimate goal is to cross the 8 percent-mark.”

Provisional estimates released by the Bangladesh Bureau of Statistics showed that the agriculture sector grew 3.4 percent in fiscal 2016-17 in contrast to 2.79 percent a year ago.

Kamal said the agricultural growth has been estimated taking into account the loss of 6 lakh tonnes of rice for flood in haor areas.

The service sector grew 6.5 percent, up from 6.25 percent in fiscal 2015-16. However, industrial output growth slowed to 10.5 percent in fiscal 2016-17 from 11.09 percent a year ago.

BBS estimates that small industries grew faster than large and medium industries in the current fiscal year, indicating a slowdown in export growth.

Of the service sector, wholesale, retail trade, real estate, hotel, restaurant and transport sectors performed well. However, financial sector registered slowdown in growth.

As a result of higher GDP growth, the per capita income rose to $1,602 in fiscal 2016-17, up 9.35 percent year-on-year.

The World Bank also unveiled its growth forecast for Bangladesh yesterday, and in keeping with the past trend it was less optimistic than the government's provisional figures.

The Washington-based multilateral lender said the Bangladesh economy will expand 6.8 percent this fiscal year owing to sluggish export growth, falling remittance and slowdown in settlement of letters of credit for industrial raw materials.

Asked why the WB's projection always remains lower than the BBS's, Zahid Hussain, lead economist of the World Bank's Dhaka office, said: “What is the benefit of making conservative projection?” 

Regardless, both the growth figures are good, so the debate on the discrepancy will only distract from the real issue: the performance of two of the three major drivers of the economy -- investment, exports and remittances -- are weaker than in last year, he said.    

Most of the other indicators performed better this year than the last, it said.

“But these three indicators are mostly important,” he said while presenting the Bangladesh Development Update May 2017 yesterday at the Washington-based multilateral lender's office in Dhaka.

The WB, noting the one percentage point increase in private investment to 23 percent of GDP in fiscal 2015-16, said the other related indicators such as the import of capital machinery and private sector credit growth suggest otherwise.

“We see from statistics that investment is rising. But it is not clear where these investments take place and at what amount,” Hussain said. Export growth in the first ten months of fiscal 2016-17 stood at 3.9 percent in contrast to 9.2 percent registered a year earlier.

During the period, remittance receipts slumped 16 percent, indicating a fall in domestic consumption. Import growth of industrial raw materials also slowed down this fiscal year, the WB said.

The lender projected that the agricultural sector would register higher growth this fiscal year as farmers responded to the relatively good prices of rice, vegetables and livestock.

The crop damage for flash flood in haor areas in April, however, has not been included in the calculation, Hussain said.

Industrial growth may edge down due to softer export growth and weaker domestic demand associated with remittances. The service sector is projected to grow at a steady rate of 6 percent, it added.

Despite cutting down the growth forecast, the WB said Bangladesh's economic growth remains resilient.

Overall inflation has declined but food inflation has increased lately as a result of a rise in rice prices, it added. The WB said indicators such as tax revenue growth and growth in import of construction materials point that the economy is well on course to maintaining robust growth.

The growth outlook in the near to medium-term is robust: the economy is likely to grow between 6.4 percent in fiscal 2017-18. “The overall indicators offer some respite. But there is no reason to be complacent,” Hussain said, citing the risks of further deterioration in financial sector stability, slippages in addressing fiscal reforms and political uncertainties in the run-up to elections in 2019.

Externally, there is policy uncertainty in the US and the Eurozone, Bangladesh's two largest export destinations.

“A jump in energy prices could also precipitate strains on import payments and the budget,” the WB report said.

Prospect of increased growth

The global lender said Bangladesh can attain higher than 7 percent annual growth on a sustained basis through increased productivity growth and higher participation of females in the labour force.

Despite the increase in the number of women joining the labour force, the number of working women is still much lower than their male counterparts: in 2013, only 33.5 percent women worked in productive sectors.

“If Bangladesh can raise the female labour force participation rate to 45 percent by 2020, it will be able to maintain economic growth 1 percentage point above trend through 2020,” the WB said.

Qimiao Fan, WB country director for Bangladesh, Bhutan and Nepal, and Carlos Felipe Jaramillo, WB senior director of the WB Group's macroeconomics and fiscal management, also spoke at the occasion.