The World Bank on Sunday retained its gross domestic product growth projection of 6.8 per cent for Bangladesh for the financial year of 2016-2017, while the government on the same day claimed that the economy grew by record 7.24 per cent in the financial year.
The WB projected that the GDP growth would be 6.8 per cent, down from over 7 per cent posted in the last financial year, considering slow export earnings’ growth, fall in remittance inflow, food inflation and early floods in some parts of the country.
The government, however, in a provisional estimate showed that the economic growth reached 7.24 per cent in this fiscal year due to ‘robust’ export growth and agricultural outputs.
WB Bangladesh lead economist Zahid Hussain while presenting the economic outlook of the country at a programme in Dhaka said that the WB projection was made based on the method it had used over the years.
‘Although private investment has increased this fiscal year, the performance on the export and remittance fronts is not satisfactory.’
Asked why the WB projection was lower than the government estimate, Zahid said that they were yet to go through the government’s GDP data for the current fiscal year. ‘As we have not seen the government data, we should not comment on this,’ he said.
Planning minister AHM Mustafa Kamal on Sunday presented a provisional calculation made by the Bangladesh Bureau of Statistics saying that Bangladesh economy grew by 7.24 per cent in the current fiscal year.
Apart from the WB, two other international lending agencies, International Monetary Fund and Asian Development Bank, and UNESCAP estimated that the Bangladesh’s GDP growth this year would fall below 7 per cent.
‘GDP is projected to grow by 6.8 per cent in FY17, with the agriculture growth rising to 4.1 per cent as farmers respond to sustained relative price increases of rice, vegetables and livestock products in the last half of 2016,’ the WB made the remark in its Bangladesh Development Update, released at its Dhaka office on Sunday.
The World Bank report opined that Bangladesh could add about three percentage points to baseline growth over the next decade by removing structural impediments to investment and innovation, improving the production, pricing and distribution of energy, ensuring corporate governance in the financial sector, increasing global integration and revenue mobilisation.
The report said that Bangladesh needed higher growth rate to accelerate its journey on the middle income path.
Investment-led strategy coupled with improvements in the efficiency of public capital and increased productivity growth as well as higher female labour force participation is required for achieving higher than seven per cent annual growth on a sustainable basis, the WB report said.
The WB said that the growth outlook in the near to medium-term was robust but the country must not be too complacent as it would require to deal with domestic and external risks.
‘Risks on the domestic side include further deterioration in financial sector stability, slippages in addressing fiscal reforms, and political uncertainties in the run up to elections in 2019,’ the report said.
Zahid Hussain said export earnings, remittance and investments were the key indicators for assessing economic growth.
Out of the three, private investment increased one percentage point to 23 per cent of GDP in FY16 from 22.1 per cent in FY15 while export growth were slow and remittance witnessed a negative growth, Zahid observed.
He said that the export earnings witnessed a slow growth due to weakness in global economy, appreciation of the local currency and lack of export diversification while remittance inflow experienced about 16 per cent negative growth due to various reasons including strict implementation of money laundering act and migration problem across the globe.
The WB report suggested the government, businesses and civil society to work together to promote gender equality in labour markets through reducing the prevalence of early marriage, strengthening girls’ early orientation to career development, gender equity in labour legislations and fostering non-discriminatory workplace environments.
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