Dhaka, Bangladesh (BBN) – The Citigroup has projected Bangladesh’s economy to grow at a lower 5.7 per cent in fiscal 2008-09 (FY09) due to slow investment and unfavorable global environment.
The projection is well below the gross domestic product (GDP) growth prediction of 6.5 per cent made for the current fiscal by the country’s central bank.
“While growth in FY08 has held steady at 6.0 per cent, trends in FY09 could come in a shade lower, at 5.7 per cent,” the US-based Citigroup said in a report released recently.
The report also observed that the Anti-Corruption campaign has already resulted in week business sentiment and slow investment.
The Group sees further weakness in consumption and investment on the back of political uncertainty, muted export growth given the poor global environment and higher import due to rising food and fuel prices.
While growth in FY10 would be ascertained by how the global scenario pans out, trends are likely to remain at sub-6.0 per cent levels, the Group predicted.
The Group also sees political uncertainty as elections draw closer. “As elections draw closer, rising political uncertainty is culminating in growing unrest and poor business sentiment,” the report noted.
On the external front, the trade deficit continues to come under pressure as imports rise on the back of higher oil and food prices, while growth in exports remain muted due to a weak global environment.
The country’s overall trade deficit is expected to rise to US$5.5 billion in FY09 from $3.9 billion in FY 08, the report estimated.
Bangladesh Taka (BDT) has remained stable in recent months in spite of deteriorating trade balance due to considerable intervention by the central bank.
The Group, however, predicted that the local currency to weaken to BDT 72 against the US dollar in FY09 from BDT 68.9 level currently as the US dollar strengthens and the trade deficit continues to widen.