Growth goal for 2012 uncertain

The increasing domestic and external risks looming over Bangladesh economy has made the country's GDP growth outlook for the current fiscal year uncertain, said the latest economic update of the World Bank.
The update released yesterday said the government's recent decisions including allowing new banks and stock stabilisation will make the banking system vulnerable.
“Bangladesh has limited room for manoeuvre to cushion the impact of a second global slowdown, if it happens,” said Sanjay Kathuria, WB's lead economist for Bangladesh.
Zahid Hussain, WB senior economist for Bangladesh, said, “Improved fiscal and monetary discipline combined with stronger efforts to address energy and infrastructure deficits will be crucial to sustain the growth performance.”
The WB report said, “Several downside risks in the international environment may affect Bangladesh. The S&P (Standard and Poor) downgrade of the US debt and the debt problems in the Euro zone are affecting the international markets renewing fears of another global slowdown.”
On the domestic front, the appetite for domestic and foreign investment can be affected by the weak investment environment, shortage in energy supply and poor quality of road transport.
The report also said the expansionary macroeconomic policies could increase risks on the current account and make inflation management more difficult.
According to WB, the GDP grew to 6.7 percent in FY 2011. This strong performance can be repeated in FY 2012 if exports continue to grow, garments exports receive a boost from the agreement reached during the recent India-Bangladesh summit, remittance persists to recover and if investment is encouraged by expansion in power production.
However, “looking ahead, growing downside risks decrease the chance that Bangladesh would be able to sustain its strong growth performance in FY 12,” said WB.