WB forecasts 6.3pc economic growth
The World Bank (WB) has projected that the economy may grow by
6.1-6.3 percent this fiscal year, driven by recovery in investment and exports.
The projection came in the WB quarterly report on 'Bangladesh State of Economy' released from its country office yesterday. It identified some risks that may affect growth prospects.
The risks are -- power shortage, continual disruptions of Chittagong Port, a rise in inflation and maintenance of industrial harmony.
WB Lead Economist Sanjay Kathuria and Senior Economist Zahid Hussain presented the report, while WB Country Director Ellen Goldstein responded to journalists' queries.
Hussain said there was a debate over the calculation of growth last fiscal year. Bangladesh Bureau of Statistics (BBS), in its first projection, pegged growth prospects at 5.5 percent, but later it revised the figure upward to 5.8 percent.
He said investment and export are growing this fiscal year. In the first quarter of fiscal 2010-11, exports grew 29.9 percent, capital machinery imports went up by 49.4 percent and industrial raw material imports grew 4.9 percent.
It can be said the economy is making a turnaround; in the field of investment good signs are visible; and as a result, growth in the current fiscal year may cross 6 percent, Hussain said.
However, Kathuria said there are a good number of risks. A major risk lies in whether the power shortage would persist and the roadmap prepared by the government for power generation will be implemented quickly, he added.
Utilisation of the existing power plants, subject to the availability of gas and prevention of mechanical failures, is necessary to avert the risk, Kathuria said. The overall power supply may not increase with new rental power, if the existing plants suffer frequent disruptions, he added.
He said Chittagong Port is Bangladesh's main port, through which the country's import export activities are carried out. So to increase growth, the port needs to be kept operational continuously, Kathuria added.
Hussain said there is uncertainty over inflation. The government has projected 6.5 percent inflation for the current fiscal year, but it may reach 7 percent, the senior economist anticipated.
He said the main reason behind the rise in inflation is the price hike of rice.
Rice prices shot up due to international market factors. It is observed that when rice prices go up in India and Thailand, the prices of the staple food item also increase in Bangladesh.
Hussain also said demand for rice in the domestic market is on the rise, but production has not. To keep prices under control, he says, production has to be boosted.
The economist however said the government steps to make the inflation bearable were appropriate.