Export to grow 9.0pc in FY10, projects Citigroup

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FE Report
The country's export is expected to grow at a rate of 9.0 per cent in the fiscal 2009-10 (FY10), US-based Citigroup said in its latest projection.
This is a downward projection from 10 per cent it made in June this year.
With Bangladesh emerging as a 'supplier-of-choice', exports on a cumulative basis remained in positive territory, up 10.3 per cent during July-June period of the fiscal 2008-09 (FY09), according to the projection.
"However, we expect to see a moderation in export growth, to 9.0 per cent in FY 10 vs. (versus) an estimated 9.5 per cent in FY09," the Citigroup said in a report released Monday from Mumbai, India.
The Citigroup also said factoring in import growth at 5.5 per cent and healthy growth in remittances would result in the current account surplus coming in around 2.5 per cent of GDP in FY10 against an estimated 1.6per cent in FY09, according to the report.
"The taka is likely to assume a depreciating trend, to Tk 72.3 per US$ by the end of FY10 from the present level at Tk 69.1," it noted.
The Citigroup also sees that the country's overall economy will grow at a rate of 5.7 per cent in FY10 from 5.9 per cent in FY09.
Finance Minister AMA Muhith in his budget speech, delivered on June 11 this year in national parliament, projected the growth between 5.5 and 6.0 per cent in FY10.
"Despite natural disasters, political uncertainty and rising prices, Bangladesh has demonstrated tremendous resilience in past years," it observed.
The Citigroup expects these trends to continue going forward. "Our estimate factor in an uptrend in industry on the back of the government's efforts towards infrastructure development as well as healthy trends in services as trade activity sees some improvement," the report said.
On the expenditure side, public sector investment coupled with healthy trends in consumption will help sustain growth, it added.
The Citigroup said inflation has decelerated from double-digit levels in September 2008 to 5.0 per cent levels currently. Other monetary aggregates - trends in private sector credit growth and broad money growth - are also healthy but remain below the central bank's projected targets, it noted.
Projected targets the fiscal deficit is at 5.0 per cent of GDP in FY10 from 4.0 per cent in FY09. This is based on realistic assumptions with GDP growth at 5.5 per cent, a 21 per cent increase in expenditure and a 14.9 per cent in revenue.
On the expenditure front, the Citigroup thinks the focus on infrastructure development, which involved 28 per cent of total expenditure, expanded fiscal stimulus package, which is 1.2 per cent of GDP and introduction of new Public Private Partnership (PPP) budget are positive and will help support growth through a thrust on investment.
"However, implement targets may require concerted effort and political will," it noted.