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Monday, April 16, 2018

A warning to be careful

IN a recent projection, the Asian Development Bank (ADB) has showed that gross domestic product (GDP) of Bangladesh will be 7 percent in this fiscal year (2017-'18) which is noticeably lower than the government forecasted 7.65 percent growth during the same period. The possibility of lower growth rate was forecasted in the Asian Development Outlook-2018 revealed by the ADB in Dhaka on Wednesday. The ADB, however, mentioned that the growth may be 7.2 percent in the next fiscal (2018-'19) as the economy looks apparently good.
We know, in every circumstance 7 percent is considered as a high growth rate. But it needs to give a closer look into the country's economy why ADB is forecasting a lower growth rate than the government desired level (7.65 percent). It said 'the GDP growth is expected to be moderated 7.0 percent in current fiscal as consumption demand slackens despite a rebound in worker remittance. In the same report,  the inflation was projected to rise in fiscal 2017-'18 to 6.1 percent from 5.4 percent in 2016-17 fiscal due to higher prices of oil and other commodities in the international markets. Besides, the upward adjustments to natural gas, electricity prices and possible taka depreciation were also mentioned as other reasons for the same.
The ADB indicated that slowest performance in the agriculture and utility sectors may be appeared as prime reasons for the lower rate of growth. There is another problem. Though country's export performance is expected to strengthen, the net exports are not likely to add to growth due to increasing import. The industry growth however is likely to pick up this year and be a main contributor to the stable growth.
We think the government must take precautionary steps in line with the ADB's forecast, especially tackling the lowering rate of economic growth. Though it has focused some positive sides of economy and congratulated the government for graduating to the developing country, at the same time it has advised to bring dimension in export commodities. The ADB has also put emphasis on infrastructural development, reform of banking sector, establishing good governance, upgrading business atmosphere and policy reforming.
The miserable condition of country's banking sector is known to all. The banking sector is now at the edge of destruction due to siphoning of thousands of crores of taka by some big businessmen. Most of the banks are now suffering from liquidity crisis due to unbridled corruption and non- payment of loans.  
It will not easy to get the desired growth until bringing the banking sector in a well-coordinated system with establishing good governance and taking back money from the looters. Otherwise, the government will need fake data to show the public a high economic growth.