Dhaka, Bangladesh (BBN)– Bangladesh Bank (BB) sees the country’s gross domestic product (GPD) growth will continue to grow at a stable rate, averaging annually 7.0 per cent in the near to medium term.
“Moderate recovery in the euro area and USA will have positive effect on growth provided that domestic private investment picked up,” the central bank of Bangladesh said in its annual report for the fiscal year (FY) 2014-15.
The increase in the public consumption from the implementation of new pay scale, large infrastructure spending on power, road communication, transportation and establishment of special economic zones (SEZ) will bring about a momentum of the GDP growth in the near to medium term, the BB explained in its report.
The report also said the domestic demand growth is expected to pick up steadily in the near and medium term as a result of improvements in business environments.
“Moreover rapid growth in gross fixed capital formation in the public sector will continue to have a positive impact on growth of corporate capital expenditure,” it noted.
The BB also said investment will also be fuelled by the expected continuation of good financial standing of enterprises, allowing them to finance investment with their own funds.
The central bank of Bangladesh expects 14 per cent growth in imports, 7.5 per cent growth in exports and 10 per cent growth in remittances in FY 16.
The ongoing government’s efforts to boost overseas employment in Middle and Eastern Asian countries will accelerate inflow of remittances, the central bank observed.
The foreign reserves are projected to keep rising to reach US$ 26 billion in FY16 from US$ 25 billion in FY 15.
“However, Bangladesh’s aspiration to become an upper middle income country by 2030 might be realistic if its economy is going ahead overcoming difficulties supply side disruptions due to political and non-political factors, financial scams, and cumbersome overseas employment process, etc,” it noted.
The BB also said the country’s inflation as measured by consumers’ price index (CPI) will remain low in the short term. “Moreover, low inflation is supported by supply factors and the declining import prices.”
Over the medium term the impact of these factors on inflation will gradually fade away, yet inflation is expected to remain below the government projection (around 6.0 per cent) made in the 7th Five Year Plan, according to the central bank.
The BB remains active in support of a market-based exchange rate regime while seeking to avoid high exchange rate volatility.
The central bank also said low cost financial support from export development fund (EDF) and other funds will be provided to the exporters to expand productive capacity in textiles, apparels and leather sectors in order to accelerate exports.
Besides, recent sustained pick up in investment and consumption imports will ease appreciation pressures on Bangladesh Taka in the near future, enhancing its export competitiveness, according to the central bank.
The BB’s monetary policy stance is expected to support the momentum of inclusive, equitable and environmentally sustainable growth, further consolidating inflation moderation and macroeconomic stability.
Banks and financial institutions are drawing on low cost refinance windows of the BB against their financing of Micro Small and Medium Enterprise (MSME) output initiatives and environmentally benign green projects, according to the central bank’s report.
“The BB’s supervisory oversight on credit disbursement and loan recovery disciplines in banks and financial institutions will intensify; with particular emphasis on risk management, internal audit and internal controls, accountability and transparency,” it hinted.
The FY16 monetary programmes projects 16.5 per cent domestic credit growth against preceding year’s 10.4 per cent actual; to accommodate 7.0 per cent real GDP growth with 6.2 per cent inflation.

BBN/SSR/AD