Economy resilient to global gloom, fundamentals strong

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FE Report
Bangladesh Bank Governor Dr Salehuddin Ahmed Thursday said the global economic recession might not affect the economy of Bangladesh, rather it might be a boon for the country as it has the resilience to perform better against all odds.
"The country's major strength is its macro-economic fundamentals, which are strong," said the BB governor, adding that the economy might not go downstream.
Dr Ahmed also brushed aside the World Bank (WB) projection of the country's poor economic growth for the current fiscal year, terming it 'irrational' and a 'caricature' based on numbers alone.
He said the estimated Gross Domestic Product (GDP) growth, as predicted by the multilateral donor agency at 4.8 per cent, is not pragmatic.
"I hope the growth rate will remain at a range between 6.0 and 6.2 per cent in the current fiscal year," he said, adding that the official growth estimation still remained at 6.5 per cent.
The BB made these remarks while speaking as the chief guest at a seminar on Bangladesh Economic Prospects and Challenges at a city convention centre.
The Citibank, N.A. Bangladesh organised the seminar, which was chaired by its Chief Executive Officer (CEO) Mamun Rashid. Economist of Citi South Asia Ms Anushka Shah presented the keynote paper in the seminar.
Speaking on the occasion, the central bank governor said the country's export earnings and remittance inflow are still strong and agricultural output is encouraging.
Exports grew by 42 per cent even during the peak of the turmoil in the latest quarter indicating a higher demand for Bangladeshi apparel items in developed countries' markets, added the BB governor.
The country has no liquidity shortage and the inflationary pressure has eased significantly.
"The fiscal indicators spell out a positive outcome for Bangladesh," he observed.
Pointing to the donor agency's estimation on imports by the developed countries including the US and the UK due to the economic meltdown, the BB governor said: "It does not mean those countries would import less from Bangladesh."
Bangladesh produces low-cost apparels, sure to be used by the developed world to meet their basic needs.
He, however, said the high-cost apparel manufacturing countries like Sri Lanka would be affected by the meltdown.
"Sri Lanka has already been affected right away," he added
Defying apprehension of Bangladeshi workers' job cuts in the Gulf countries, Dr Salehuddin Ahmed said: "The majority of our remitters are recruited basically in the services sector and municipalities. If they don't return on their own, they wont be affected."
The BB governor expected remittance earnings to the tune of US$ 9.0 billion in the current fiscal.
He also criticised another donor agency's recent projection on inflation in the country.
"The agency predicted that a second round of inflation would be there in the country, which has now proved wrong," the BB governor said without naming the agency.
The country's private sector initiatives along with the government policy are supportive of the economic growth, he added.
"Bangladesh stands to have a good potential for growth among the South Asian countries," he mentioned.
It is the only country in South Asia that has current account surplus, Dr Ahmed said, pointing to the demand for depreciation of taka against the US dollar.
The exchange rate is not the only component that can help stay in competitiion, he said.
The BB governor, however, termed the issues of price stability and necessary support to growth as the major challenges the country would face in the coming days.
"The next government will inherit a relatively strong economy," he said, responding to a query on the economy the next elected government will have to tackle.
President of the Metropolitan Chamber of Commerce and Industry (MCCI) Latifur Rahman said the industrial sector is set to witness a hopping growth with the private sector playing the major role.
He said the country's economy is driven by domestic consumption, which represents 75 per cent of the total economy.
"I don't think the local consumption would slow down too much," said Mr Rahman, who is also the managing director of Transcom Group."
He also stressed the necessity of rationalising the energy prices to woo private investments.
CEO of the Foreign Trade Institute Prof M A Taslim said the country's real challenge would be from the domestic sector, not external.
"If the political transition is smooth, the country's development would be significant," he observed.
Mr Taslim expressed the hope that the next general election would be free and fair and everybody would accept the results.
Former secretaries Siddiqur Rahman Chowdhury, Suhel Ahmed Chowdhury and Dr Taufiq Elahi Chowdhury, former ambassador Nasim Ferdous, former CEO of Chittagong Stock Exchange Waliul Maruf Matin, and chairman of Shamunnay Dr. Atiur Rahman also spoke at the seminar.