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Download PDF The central bank in its quarterly report yesterday predicted that the economy would grow positively with heightened business confidence and socio-political stability against the backdrop of elections scheduled for late 2008.
“It is likely that the country’s near-term growth prospects would become brighter through rapid and effective implementation of policy strategies and reform programmes taken up by the government,” Mustafa K Mujeri, chief economist of the Bangladesh Bank (BB), said while releasing the report at a press conference at the central bank headquarters.
The quarterly report was based on economic indicators of October-December, 2007 — the second quarter of fiscal year 08. BB Economic Adviser Habibullah Bahar was also present at the programme.
The quarterly report shows that during the second quarter of the FY08, the real economy showed an improving pace of growth as the domestic production activities started to rebound after floods and Cyclone Sidr. The export growth started to gather pace as well, noted the report.
In the report, the BB revised GDP growth rate in the range of 6.0 percent to 6.2 percent for the fiscal. Earlier, in the beginning of the fiscal, the BB had estimated a GDP growth of 7.0 percent for the FY08.
“We have estimated the GDP assuming that the political situation is turning to a positive trend,” Mujeri told reporters.
He said the growth momentum of the economy, which somewhat slowed down in the previous quarters primarily due to slow growth in agriculture and manufacturing sectors, showed a recovering trend amidst an upward pace in service sector activities.
Mujeri said the growth outlook is also dependent on measures by the government to address the emerging constrains.
It will be important for the government to continue its efforts in ensuring timely supply of adequate fertiliser, quality seeds and other agricultural inputs, and provide agricultural credit and marketing support, he said quoting from the quarterly report.
“Similarly, the growth of industry and service sectors would depend on sustaining conducive business and investment environments,” he said.
Available data in the second quarter of FY08 shows that disbursement of agricultural and industrial credit, import of industrial raw materials and intermediate goods, index of manufacturing production, rate of cargo handling at Chittagong and inflow of workers’ remittance indicate that the real economy has regained its normal growth performance and is moving toward its trend level.
The report also says encouraging adequate credit flows to all productive sectors would be crucial for realising the expected increase in economic activities in the coming months.
On inflation, the quarterly report says the gap between urban and rural inflation rates widened in the second quarter of the fiscal in respect of food and non-food categories.
The report says the prevailing difference in inflation rates between rural and urban areas points to the need for increasing domestic production, especially the production of food and other essential items, as the most effective measure to combating the current inflationary pressure.
As per the BB report, the provisional figures indicate that the overall fiscal deficit during the second quarter of FY08 stood at 2.1 percent of GDP as opposed to 1.0 percent in the corresponding quarter of FY07.
The overall domestic financing during this period was Tk 112.1 billion against Tk 46.9 billion in the second quarter of FY07.
“The increasing bank financing to meet the budget deficit is a concern for its bad impact on overall economy,” the report said.
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