The achievement of targeted economic growth will not be possible without further development of the power, energy and communication infrastructure, the central bank said in its latest annual report for the fiscal year (FY) 2011-12, released on Thursday.
“Attainment of the expected gross domestic product (GDP) growth in the fiscal year (FY) 2012-13 will depend mainly on effective adoption of prudent macroeconomic policies in a sound domestic economic environment along with global economic recovery,” the Bangladesh Bank (BB) said.
The accompanying achievements of a more stable exchange rate and a declining inflation setting have contributed to the favourable revision in macroeconomic indicators announced in the updated Medium Term Macroeconomic Framework (MTMF) for 2013-17, according to the report.
“Bangladesh’s recent economic growth averaging 6.2 per cent over the past decade is undoubtedly impressive,” the BB said.
The real gross domestic product (GDP) growth has been projected to rise to 7.2 per cent in FY ’13 and increase gradually to 8.0 per cent by FY ’15 and remain slightly above this 8.0 per cent level thereafter.
“It is envisaged that these large investment projects would be undertaken by both the government and the private sector, as well as through joint endeavours,” the central bank suggested.
Furthermore, underlying the growth projections are additional expansion in the industry and services sectors, the report said, adding that the main growth impetus from these sectors would stem principally from further expansion of small and medium enterprise (SME) activities and augmenting agriculture outputs through productivity enhancements and diversification.
The BB also said Bangladesh will also need to focus on markets outside the European Union (EU), particularly in the ASEAN and the SAARC countries.
“These sound economic policies combined with the policies contributing to rapid gains in social indicators will contribute to Bangladesh’s aspiration to become a middle income country in the near future,” it noted.
The country’s economy experienced an impressive over 6.0 per cent growth rate in FY ’12 despite the global crisis.
“Global growth performance should improve moderately in 2013 given the proactive role adopted by the European and the US policymakers to deal with their major short and medium term economic challenges,” the report said.
The central bank also said even against this background of difficult global economic conditions, the prospects for the Bangladesh economy are favourable over the near and medium term.
However, macroeconomic policies must continue to support a vigorous and sustained expansion in agriculture and industry together with an acceleration in investment activities while striving to maintain inflation under control, the report added.
“This policy course will reinforce the recent trends in the economy which has experienced a moderate growth in the agriculture sector, increased government revenue collection and large investments in infrastructure including in the power sector,” it noted.
Accordingly, gross domestic investment has been projected to increase gradually from 26.6 per cent of GDP in FY ’13 to 32.8 per cent in FY ’17 supported by the introduction and implementation of pro-industrialisation and investment friendly economic policies and strategies.
Inflation is projected to decline to 7.5 per cent in FY13 and to decrease gradually afterwards, the BB said.
Mentioning the global scenario, the report also said Bangladesh has been experiencing a high inflationary situation though the pressure eased somewhat in the last few months.
Prudent policy stance is required to maintain the target rate as the economy is facing a few challenges including higher non-food inflation, slow global recovery, international oil price increase and exchange rate fluctuation, according to the report.
The central bank also said the target for achieving single digit inflation (7.5 per cent) seems to be possible, assuming continuous easing in global food and fuel prices and pursuing Bangladesh Bank’s stance on lowering money supply growth with no major domestic supply-side disruption,” noted.
“Lastly, unless administered fuel and energy prices are revised further upward, with continued bumper food production, inflation is likely to remain on a declining trend in the next fiscal year,” it noted.
Source: Financial Express