Bangladesh Bank has projected that the growth of the country’s gross domestic product would be in the range of 7.1-7.3 per cent in the current fiscal year, but a negative growth in inward remittance and an upward adjustment of natural gas prices might create downside risks to the projection.
The central bank came up with the projection in its quarterly (July-September of the FY 2016-17) publication ‘Bangladesh Bank Quarterly’.
The government has set the GDP growth target at 7.2 per cent for FY17. In FY16, the country’s GDP growth was 7.1 per cent.
Former interim government adviser Mirza Azizul Islam said the growth of remittance and export fell in the first half of this fiscal year that might hit the GDP growth.
‘Private sector investment was also not satisfactory. These components [remittance, export and private investment] are vital to achieving GDP growth,’ he said ‘the central bank has made the projection (7.1-7.3 per cent) to appease the government.’
The BB data showed that the inward remittance decreased by 11.13 per cent to $13.61 billion in 2016 compared with that of $15.31 billion in 2015.
The inward remittance significantly decreased in 2016 as a good number of expatriate Bangladeshis sent their money by using illegal ‘hundi’ channel, according to a BB observation.
The remittance inflow stood at $14.94 billion in 2014, $13.83 billion in 2013, $14.17 billion in 2012 and $12.16 billion in 2011.
The FY17 national budget has set target of achieving 7.2 per cent output growth and keeping inflation at 5.8 per cent for FY17, the BB in its quarterly publication said.
It said the BB formulated its monetary policy, keeping sight of the targets.
For the first half of FY17, the BB set target of reserve money growth at 11 per cent, broad money growth at 14.80 per cent and private sector credit growth at 16.60 per cent by December 2016.
In the quarterly publication, the BB observed that economic activities witnessed a strong expansion in the first quarter of FY17 compared with the level of the corresponding period a financial year ago.
The agriculture sector was active during the first quarter of FY17 due to absence of any major weather-related disruption, though credit to the agriculture sector registered a somewhat lower growth of 6.12 per cent.
The strong growth in imports (17.29 per cent) and on-track growth of private sector credit (15.86 per cent) represented a picture of buoyant domestic demand in the first quarter of FY17, while the negative growth of remittance inflow might have some dampening effect
on the demand, the BB publication said.
At the same time, the low growth of exports (4.12 per cent) was also suggesting weak external demand during the period under review, it said.
The banking sector indicators showed some concerns during the first quarter of FY17 as gross non-performing loan ratio crept up to 10.34 per cent at the end of September 2016 from 10.06 per cent at the end of June 2016.
The capital adequacy ratio remained unchanged at10.3 per cent in September 2016. On the other hand, the spread of monthly weighted average interest rates for all banks fell to 4.76 per cent in September 2016 from 4.91 per cent in June 2016 owing to falling lending rates.
The weighted average call money rate decreased marginally from 3.70 per cent in June 2016 to 3.64 per cent in September 2016.
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