ADB Country Director Kazuhiko Higuchi speaks at a media briefing at the bank's Dhaka office yesterday. Photo: Star
The Asian Development Bank is bullish over Bangladesh's economic
prospects this fiscal year, upgrading its growth forecasts while
downgrading those for the rest of Asia Pacific save for Vietnam and
Fiji.
The Manila-based multilateral lender tipped Bangladesh's gross
domestic product to grow at 6.7 percent in fiscal 2015-16, up from its
earlier prediction of 6.4 percent in its flagship annual economic
publication, Asian Development Outlook that came out in March.
The optimism comes after the country outperformed ADB's growth
forecast of 6.1 percent for fiscal 2014-15 in spite of political turmoil
in the first quarter of 2015 that adversely affected transport
services, exports and private investment.
Growth held up well because of brisk domestic demand, boosted by
higher remittances, private sector wages and public investment, said
Kazuhiko Higuchi, country director of ADB, while unveiling the updated
version of March's report yesterday at the lender's office in Dhaka.
Mohammed Parvez Imdad, principal country specialist of ADB's
Bangladesh office, presented the Bangladesh chapter of the report at the
event.
The GDP growth forecast has been revised upwards upon expectations
that exports will grow with the continued economic recovery in the US
and the Eurozone and remittance will soar further, which, in turn, will
boost consumption demand.
ADB also expects the private and public investment to pick up as the
business climate improves in a stable political situation and spending
to increase under the annual development programme, both of which will
have a positive impact on GDP growth.
ADB praised the country's macroeconomic management, which, it said,
has helped reduce inflation to 6.4 percent in fiscal 2014-15 from 7.4
percent a year earlier.“This was a very good achievement,” Higuchi said.Provided that normal weather prevails and prices remain favourable,
agriculture growth is projected to move up to 3.2 percent this fiscal
year from 3 percent last year.
Industrial growth is expected to strengthen but modestly to 9.8
percent from 9.6 percent last fiscal year on the back of better
performance in readymade exports, manufacturing for domestic market and
construction.
Growth in services is expected to increase to 6 percent from 5.8 percent as agriculture and industry expand.
Export growth is expected to increase to 6 percent this year, up from 3.3 percent a year ago.
Imports are projected to increase by 13 percent, from 11.2 percent
the previous year, mainly in capital goods, industrial raw materials and
food grains.
Remittance inflows are likely to grow 9 percent in fiscal 2015-16
from 7.7 percent a year earlier as the government steps up efforts to
place workers overseas. Several risks could derail the projections, and
foremost among them is political instability.
Failure to attain the revenue target without matching expenditure
adjustments would create inflationary pressure as the government
borrowed from the banks and so undermine macroeconomic stability.
Likewise, inadequate foreign investments would limit spending through
the development plan on infrastructure, and thereby curtail growth.
Meanwhile, softer growth prospects for China and India, and a slow
recovery in the major industrial economies will combine to push growth
in Asia for 2015 and 2016 below previous projections, according to the
ADB report. ADB now sees GDP growth for the region coming in at 5.8
percent in 2015 and 6 percent in 2016 -- below the March forecasts of
6.3 percent in both years.
China -- the world's second largest economy -- has seen growth
moderate due to a slowdown in investment and weak exports in the first
eight months of 2015. Growth is now seen at 6.8 percent in 2015, down
from 7.2 percent projected earlier, and below the 7.2 percent posted in
2014.
External demand weaknesses and a slower-than-expected pace of
enacting key reforms are holding back India's growth acceleration, with
the pace in 2015 now seen at 7.4 percent, down from 7.8 percent forecast
earlier.
Southeast Asia, meanwhile, is bearing the brunt of the slowdown in
China -- one of its key markets -- as well as subdued demand from
industrial countries, with growth in 2015 now seen at 4.4 percent,
before bouncing back to 4.9 percent in 2016.
