The World Bank has projected that Bangladesh’s economic growth might slow down to 6.4 per cent in the fiscal year 2017-18 against the government’s target of 7.4 per cent growth.
The Bretton Woods institution made the projection in a report, Bangladesh Development Update, released on Wednesday at a press briefing held at the WB office in the capital, Dhaka.
Slowdown in job creation, flat export, slowdown in remittance growth and the damages caused by flood to agricultural output and infrastructure have been identified as the major reasons for the lower projection.
WB country director Qimiao Fan said Bangladesh was lagging behind in the area of infrastructure.
He, however, mentioned that this was an area where Bangladesh could actually try to do better than others without making significant investment.
‘Future growth will be very much dependent on what kind of policy and environment Bangladesh have,’ Fan said.
He said that the reform activities of the country might slow down in the run-up to elections planned for early 2019.
Fan said that a hardening of credit constraints with increased insolvency of banks due to rising non-performing loans was among other downside risks.
Access liquidity in the banking sector and reduced fiscal states associated with costly domestic financing of the deficit budget present latent risk to macroeconomic stability of the country and this risk needs to be monitored very closely, he said.
A WB analysis identified several challenges that would require concerted implementation of policies and institutional reforms to absorb the newly added labour force, the WB country director said.
Creating quality job in the formal and informal sectors has been remaining as one of the key challenge, he said.
The rate of job creation has slowed down during the years 2011-16.
Total employment growth of the country was 3.10 per cent per annum during the years 2003 to 2010 and that declined to 1.8 per cent during 2011 to 2016 impacting negatively over the youth and women workforces, said WB lead economist Zahid Hussain.
Considering the inflation the wages for the labour have not increased that much that also reflects that it has not become possible to build quality labour force, Zahid said.
On the shrinking remittances, the WB lead economist said the remittance in Bangladesh, as like other countries of the world, declined despite an increased number of labours going abroad.
He said oil price fall on the international market could not be mentioned as the only reason for the lower remittance.
Inflow of remittance through the banking channel has declined due to hardening of procedures for repatriating money through the formal channel, Zahid said.
Despite the facts, the projected GDP growth of Bangladesh can be considered very high in the regional and international contexts, he said.
Replying a question how the Rohingya refugee crisis would impact the Bangladesh economy and whether the WB would help Bangladesh in this regard, Fan said that the crisis would put an impact on the economy but it could not be mentioned right now the degree of impact.
He also said, ‘The World Bank stands ready to support the government in addressing the growing refugee crisis if the government seeks assistance.’
Fan said that any country could avail up to $400 million during a period of three years from the IDA18’s refugee window of the WB.
Source: New Age