Bangladesh economy may grow by 7.1 per cent this fiscal year, says a UN agency forecast that little lowers government projection.
The United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) unveiled the projection in its flagship report titled 'Economic and Social Survey for Asia and the Pacific 2017'. The year-end update of the report was released Wednesday in Bangkok.
It, however, listed a set of risks, including the Rohingya crisis, which could come out as upsets in the prospects for growth.
"Bangladesh ended fiscal year 2017 exceeding earlier forecasts as well," the report said. "Despite a slowdown in exports and remittance inflows, it grew by 7.2 per cent in fiscal year 2017, which is its best performance in a decade, supported by the manufacturing, services and agricultural sectors," it added.
According to the final estimation of Bangladesh Bureau of Statistics (BBS), country's gross domestic product (GDP) growth rate stood at 7.28 per cent in FY17.
"The momentum is expected to continue in 2018 on the back of strong domestic demand and infrastructure investments," according to UNESCAP.
The government has set a target to achieve 7.40 per cent growth in the current fiscal year. The World Bank lowered projected growth rate to 6.40 per cent while the Asian Development Bank (ADB) put it at 6.9 per cent and the International Monetary Fund (IMF) at 7.0 per cent.
The report also projected that annual inflation rate would be 5.5 per cent in the current fiscal year, a little up from 5.4 per cent in the past fiscal year.
"In Bangladesh inflationary pressures eased towards the end of the fiscal year as global oil prices stabilised, non-food inflation declined and food inflation was kept at bay due to a decent harvest in the agricultural sector," it explained.
Focusing on infrastructure, the report referred to the report of Global Infrastructure Hub which showed that infrastructure-investment shortfalls would range from 4-7 per cent of GDP in Cambodia, Myanmar and Pakistan to 1-2.5 per cent of GDP in Bangladesh, India, Russia and Vietnam.
The UN agency, ESCAP, also pointed out that actual tax-collection levels were below their potential in 17 Asia-Pacific economies (for which data were available).
"Such tax gaps were estimated to be more than 6 per cent of GDP in Afghanistan, Bangladesh, Bhutan, Islamic Republic of Iran and the Maldives," it added. In fact, the gap is estimated 7.5 per cent for Bangladesh--the highest among the 17 nations.
The report mentioned that economic conditions in the Asia-Pacific region remained stable, supported by stronger-than-expected performances in some of the region's larger economies and steady performance in most smaller ones.
"Stronger-than-expected performance in large economies, such as China, and steady performance in smaller ones, such as Bangladesh, Malaysia and Thailand, are likely to lead to a higher average economic growth rate in the region for 2017 compared with that for 2016," it added.
The UNESCAP, however, cautioned that deepening inequalities and domestic financial vulnerabilities in some economies, along with a high number of climate-change-induced natural disasters in the region, however, may overshadow the outlook for economic growth and the prospects for sustainable development.
Among other risks for Bangladesh, the UN body mentioned the ongoing Rohingya crisis.
It observed that higher inequality and domestic financial vulnerabilities in some countries, geopolitical developments in the Korean peninsula, the Rohingya-related crisis in Myanmar and a high number of climate-change-induced natural disasters are risks casting their shadow not only on the outlook for economic growth but also on the prospects for sustainable development.
"Myanmar is currently undergoing a crisis that has led more than 500,000 Rohingya Muslims to flee into Bangladesh," it added.
The report highlighted that domestic private consumption remained main driver of economic growth, facilitated by relatively low inflation, low interest rates and robust consumer confidence.
"Stronger exports also contributed to the recent uptick in economic growth," it observed. "The average GDP of developing economies in the region is expected to grow by 5.4 per cent in 2017."
asjadulk@gmail.com