Economy won't be in 'comfortable' territory this fiscal, warns Muhith

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FE Report
Finance Minister AMA Muhith Monday warned that the Bangladesh economy would not be in a "comfortable" position this financial year, even if it weathered the first round of shocks from the stinging global recession.
He said the US$ 90 billion economy fared well in the last fiscal, aided by good merchandise exports and performance of the real sector.
"Performance of the real economy helped us to be at a comfortable position last year," Mr Muhith said as he opened United Nations regional conference on global recession in the city.
"The kind of protection we took last year has benefited us," he added.
Bangladesh managed to grow by 5.9 per cent in the fiscal year ended June 30, while the growth in world's major economies and emerging markets slid under pressure from the worst downturn in more than seven decades.
Mr Muhith called upon the international community to facilitate trade finance, particularly for essential items such as food, fuel and fertiliser.
"Reserves are enormous and that should be used for trade finance," he said.
He said that even though Bangladesh has no balance of payment problem, it has to take recourse to external borrowing for trade finance.
He said countries like Bangladesh should invest massively in social and infrastructure sectors, but that would require external aid.
"It remains critically important how the developing nations finance infrastructure investments."
"We should not distract from our goal of poverty reduction," the minister told finance and central bank officials from the Asia Pacific region.
"It's important how the US$ 1.0 trillion is used for low income nations," he said.
The world's wealthiest nations pledged the amount to help revamp the global economy as they met in London a few months back.
The Bangladesh finance chief said the early warning system failed, even though the crisis has started to unfold since 2002 and stressed on restructuring the global economy.
He insisted that a robust domestic demand can help stave off the crisis.
Bangladesh Bank governor Dr Atiur Rahman said the global crisis has impacted Bangladesh relatively lightly because of its limited, regulated openness, particularly to short term capital flows.
"The financial sector in Bangladesh remains free of the toxic assets and contagion from the external turmoil and liquidity conditions remain normal," he said.
The competitiveness of apparel exports retained overall export growth rate at double digit levels, workers; remittance inflows grew strongly and the economy grew with single digit inflation, he said.
But the government and the central bank have adopted fiscal and monetary measures underpinning domestic demand and maintaining easy credit conditions to cope with the likely prolonging global downturn, he told the regional conference.
The Bangkok-based UN Economic and Social Council for Asia and the Pacific (ESCAP) and Bangladesh Bank jointly organised the conference to share ideas on how the region can respond to the crisis collectively.
The Bangladesh central bank boss noted that intraregional exports need to grow faster, not just in primary or intermediate goods but also in finished consumer and capital goods, to reduce dependence on the western markets.
Dr Rahman urged the government and central banks in the region to foster accelerated development of bond markets to channel regional savings into real sector investments within the region rather than investing savings in opaque, complex financial assets in the western financial markets.