WB projections for our economy
The World Bank's rather presumptive and premature portrayal of the shape Bangladesh economy is likely to take at the end of fiscal 2008-09 has naturally evoked a sharp reaction from finance adviser, governor, Bangladesh Bank, president, BGMEA, eminent economist Wahiduddin Mahmud and many others.
Looking at the entire gamut of reactions we find some of them to be extremely strident and some others to be overly optimistic and complacent. We believe, the truth lies in between the two extremes.
We wonder why the World Bank should have chosen to make the projections on a hypothetical basis with no hard data in hand to be doing so. For, the WB says that not until after three months will it be clear as to what changes, if any, would occur in the patterns of demands for Bangladesh's RMG products and her manpower export. When we are struggling to keep growing economically why such predictions should have been made with a possible dampening effect on our industrialists, producers and exporters.
The sum and substance of the WB's forecast is that the global economic meltdown might have our export growth fall by 4.3 percentage points and remittance by 20 percentage points from the levels reached last fiscal. What has really dropped as a bombshell on the local economic outlook readings is the WB projection that the GDP growth rate might fall to 4.8 percent. The finance adviser has promptly reacted by asserting that it wouldn't be any less than 6 percent.
Admittedly, the present statistics of growth in export, remittance and even agricultural output are favourable. What we basically need now is to sustain the present trends navigating through the pressures that might be exerted on our economy by the crunch in the global consumer market and in terms of investment, especially in the construction sector and due to falling oil incomes in the Middle East.
What needs to be borne in mind though, the garment products we offer are at the lower end of the demand spectrum; and importantly, these have few substitutes, so we almost have a captive market there. Of course, things we have to watch out for are that the effects of recession might seep through to the middle and lower income groups in the EU and the USA and that there might be pressures from the foreign buyers to lower our prices which are already showing. As an answer to the problem of any dwindling remittance flow we have to seek some new destinations for manpower export with emphasis in the skilled category.
With the macroeconomic fundamentals like relative insulation from global financial market, adequate foreign exchange reserve and ease in terms of inflation and reduced deficit, the government's facilitatory role should be enhanced.
Thus, the global recession comes with both risks and opportunities for a country like Bangladesh. If we can strengthen our regulatory system, ensure transparency in all sectors, especially in the financial institutions, bring improvement in infrastructures, particularly electricity, gas and road communications, there is no reason why productivity cannot be bolstered and increases in export and GDP achieved.