Dhaka, Bangladesh (BBN) – The central bank of Bangladesh has predicted an economic growth rate between 6.2 per cent and 6.5 per cent in the current fiscal and easing of inflationary pressure in the coming months.
Bangladesh government in its budget document had projected 6.5 per cent growth in the fiscal 2008-09 (FY09) assuming that there would be no major natural disaster.
The central bank estimation came against the backdrop of the global financial crisis that has already hit different countries across the world, officials said.
“We’ve forecast the growth to range between 6.2 per cent and 6.5 per cent in FY09 in a more cautious approach than the government,” Chief Economist of Bangladesh Bank (BB), the country’s central bank, Mustafa K Mujeri told reporters on Sunday while releasing the BB quarterly for July-September 2008.
He also said the central bank is still not sure about the impact of the global financial crisis. “Our Policy Analysis Unit (PAU) is now working to assess the possible impact of the crisis on the economy,” he noted.
“In view of the current global financial turmoil, the priority for Bangladesh is to improve the quality of information that the banks and other financial institutions provide and those collected by the regulatory agencies,” the BB said in its quarterly.
Clearly, Bangladesh needed to plug the gaps in regulatory and supervisory infrastructures and strengthen its regulatory regime in a comprehensive manner covering all institutions dealing with both household savers and institutional investors in order to avoid the creation of any systemic distress, the quarterly added.
“The important agenda for Bangladesh would be to convert the current global crisis into a learning opportunity in order to move forward,” it noted.
The PAU of the BB indicated on the basis of its preliminary analysis that it would be possible to achieve gross domestic product (GDP) growth in the range of 6.2 per cent and 6.5 per cent in FY 09 following continuation of the favourable conditions and strengthening of growth-supportive policies.
It also said the twelve-month average inflation rate is more likely to remain in the range of 8.50 per cent and 9.0 per cent in FY09 against 9.5 per cent earlier estimated by the government.
In June last, the government said in its budget document that the average inflation would come down to 9.0 per cent in FY09.
“The inflationary pressures on economy will ease gradually in near future because of the downward trend in food prices, which account for 59 per cent of the Consumers’ Price Index (CPI),” the BB chief economist added.
The BB, however, said the private sector spending is likely to be higher than normal due to the national elections scheduled to be held in December this year.
The country’s near-term economic outlook remains positive and current movements of major macroeconomic aggregates are in the right direction, according to the BB quarterly.
“The growth in productivity across the entire economy is essential to maintain the positive near-term outlook and achieve a higher real sector growth,” it added.
In this respect, several critical areas need priority action including weak infrastructure, power shortages, transport bottlenecks, market instability, and inefficiencies in raising workers’ remittances and exploring new overseas labour markets, the central bank recommended.
“Moreover, ensuring congenial business climate and reasonable socio-economic stability in the backdrop of the national elections in December 2008 are the priority issues,” it noted.
BBN/SI/SS/AD-03November08-10:35 AM (BST)