Finance minister AMA Muhith on Thursday projected a 7.8-per cent growth in gross domestic product in the proposed national budget for the financial year of 2018-19, but economists expressed scepticism about achieving the target in an election year.
Muhith while presenting the national budget in parliament banked on both external and internal economic performances for projecting the higher economic growth.
He said that GDP grew by 7.65 per cent in the outgoing fiscal year of 2017-2018 against the 7.4-per cent projection in the budget because of satisfactory production of aman and boro rice, increase in domestic demand induced by increased personal consumption and government expenditure, uptrend in remittance inflow and global growth and trade.
Muhith hoped that agricultural production would rise further in FY19, global growth, particularly neighbouring countries’ growth, would help pick up the export and foreign investment and remittance inflow would rise.
Muhith in his budget documents projected that the share of investment to
GDP would rise to 33.54 per cent in the next FY19 from 31.47 per cent while the share of private sector investment to GDP would increase to 25.25 per cent from 23.25 per cent.
Economists, however, expressed scepticism about Muhith’s projection of GDP and investment rise considering possible sluggish economic activities because of the general elections likely to be held at the end of this year and stagnant private investment amid liquidity crisis in the financial sector.
In the outgoing fiscal year, in which the government claimed 7.65 per cent GDP growth, private investment-GDP ratio increased by only 0.15 percentage points.
Dhaka University economics department professor MA Taslim said that the private sector investment would be a key factor in achieving the targeted growth.
Although the government provided different benefits to attain more private sector investment, the investment remained around 22 per cent of GDP over the years, he said.
South Asian Network on Economic Modeling executive director Selim Raihan told New Age that mobilising private sector investment, that remained almost stagnant for last few years, would be a challenging factor in attaining the targeted GDP growth of 7.8 per cent in FY19.
‘As it’s a year of general elections, people usually would wait to see what is going to happen,’ he said.
Muhith, however, said that they should concentrate on several areas like domestic demand and investment and external demand or export to sustain higher growth.
‘It is expected that high remittance inflows will continue in the medium term due to the increase in overseas employment in recent years.
‘Higher population and remittance inflows will continue to stimulate ongoing trend in domestic consumption of the private sector,’ he said.
‘Therefore, we should focus on accelerating the pace of growth by creating supporting environment for private sector and individual enterprises,’ he added.
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