Thursday, July 19, 2018 | ePaper

Economy to come under more stress

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THE World Bank has retained economic growth projections for Bangladesh at 6.4 per cent for the current fiscal year 2017-2018, much lower than the government's target, forecasting some risks including declines relating to upcoming elections and weak tax revenues. The global lender made the projection in its flagship report titled 'Global Economic Prospect: Broad-Based Upturn, but for How Long' released on Wednesday from Washington. Though the WB did not clearly mention about the slippages relating to upcoming elections, typically in Bangladesh tension prevails between competing political parties causing political unrest and violence affecting economic activities. As the modus operandi of the election-time government is one of discord, the speculation of violence and subsequent economic loss would not be avoided.
The government in the National Budget for FY 2017-2018 had set a target of achieving GDP growth at the rate of 7.4 per cent on the achievement of 7.2 per cent in FY17. Earlier in June and October last year, WB also said that Bangladesh's economy would grow by 6.4 per cent in FY2018. Past experiences show that election-related uncertainties like unrest, strikes and violence loom ahead of elections in the country. Normal economic activities are disrupted during the period. The government high-ups have already said that there would not be any reforms in the election process.
Economist said that achieving growth at 6.4 per cent would be admirable as still it was the 17th highest growth projection among 134 countries. Economy of only 17 countries would grow by 6.4 per cent or higher rate in FY18. World Bank makes the projection assuming that business would remain as usual in the period. Besides, the existing scenario including increased vulnerability in the banking sector and deficiency in infrastructure also did not support the government's 7.4 per cent growth target.
The main risks for Bangladesh's economy are fiscal slippages, setbacks to reforms to resolve corporate and financial sector balance sheet deterioration, disruptions due to natural disasters, persistent security challenges and weakening domestic demand.
High levels of non-performing loans have been long-standing concerns for Bangladesh. As an external risk, an abrupt tightening of global financing conditions or a sudden rise in financial market volatility could set back regional growth.
A protracted slowdown in remittance inflows would weigh on domestic consumption in Bangladesh. Bangladesh's growth in FY17 was 7.2 per cent, in official record; exceeding the June forecast owing to higher-than-expected outturns in the manufacturing and services sectors.

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