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Economic growth faces some risks: MCCI

Staff Correspondent | Published: 00:00, Sep 05,2019

 
 

The Metropolitan Chamber of Commerce and Industry on Wednesday said that there were significant downside risks, including power and gas shortage, insufficiency of investment and weak infrastructure that posed threats to the country’s economic growth despite creditable achievements in last fiscal year 2018-2019.

The leading trade body in its quarterly review of economic situation in Bangladesh for April-June period made the observation with an urge to carefully address the risks as it might disrupt industrial production and also discourage new investment.

Bangladesh’s estimated GDP growth at 8.13 per cent in last fiscal year is immense compared with the GDP growth of many other developing countries, it said.

‘However,  despite  the  creditable  performance  of  the  economy  in  certain  areas,  overall achievements  remain  below  their  true  potential,’ said the MCCI report.

Inadequate  infrastructure,  lack  of  investor confidence  in  the  economy  that  discourages  fresh  investment,  and  shortage  of  power  and energy,  are  now  major  impediments  to  the  growth, it commented.

Weak implementation and ambiguity of regulatory and policy frameworks, among others, are another obstacles to the economy, it added.

These  impediments  must be  removed  to  restore  the  confidence  of  the  foreign  investors  as  well  as  the  country’s  own business and investor community, the report stated.

Though power supply situation improved in the quarter, the production capacity compared to the total installed capacity remained low because of gas shortage while transmission capacity appears to be a limiting factor in the supply of power to the consumers, MCCI observed.

Private sector credit registered 11.29 per cent in last fiscal year against that of 16.94 per cent in the previous fiscal year 2017-2018. Private sector credit growth was also below Bangladesh Bank’s target of 16.5 per cent set in the monetary policy for the second half of FY19.

The  capital  market  witnessed  a  declining  trend  for  most  of  the  time  in  the  year.

The overall economic situation is positive as indicated by steady improvements in the major economic indicators.

Steady progress in the agriculture sector, moderately good growth in industry despite the crisis in the power sector, the decline in the inflation rate, macroeconomic stability, the build-up of a comfortable foreign exchange reserve, and good progress in achieving the  SDGs  boost  people’s  confidence  in  the  country’s  ability  to  attain  accelerated  economic growth, according to the report.

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