Govt scales down economic growth projection to 5.5pc

FE Team | Published: October 28, 2007 00:00:00 | Updated: February 01, 2018 00:00:00

Shakhawat Hossain
The government has scaled down the economic growth projection for the current fiscal year (2007-08) by 1.5 per cent to 5.5 per cent due to the recent floods and the negative impact of the ongoing anti-graft drive on business activities.
The lower than original GDP growth projection was highlighted in the position paper of the government circulated during a meeting with an International Monetary Fund (IMF) mission held last month in Dhaka.
The position paper, titled, Economic and Financial Policies (EFP) for November 2007-December 2008, however, held the impact of anti-corruption campaign as the major factor responsible for slowdown in economic activities.
"While the flood is estimated to have had a limited impact on the economy, the anti-corruption campaign has led to uncertainty in the business community, temporarily disrupted activity in some sectors, particularly construction, and has dampened overall investment" said the EFP.
The contribution of construction sector to the GDP during the last three fiscals was more than 9.0 per cent.
The manufacturing sector, spurred by the export of readymade garments (RMG), recorded double digit growth in the last couple of years.
The RMG export declined more than 23 per cent in July last that according to the EFP is the result of the political turmoil in the late 2006 and warm weather in major export markets.
The government's GDP growth projection is 1.0 percentage point below that of the Asian Development Bank (ADB).
The ADB in its Asian Development Outlook 2007 update last month, held two rounds of flood responsible for a possible 0.5 percentage point fall in GDP growth projection.
However, the government expressed the hope of a turnaround 'with the business community slowly adjusting to the regime change' and the economy returning to a growth-path of 6.5-7.0 per cent.
It also expected a reverse trend in point-to-point inflation from next month (November) with the help of an improved supply situation.
Listing downside risks, the government, however, said in case of adverse weather conditions in the coming months, the economic growth could slow down further in the fiscal 2007-08. The market turmoil in advanced economies and global commodity price pressures are two other major factors that, the government fears, might also pose a threat to growth and price stability.