Macro-economic stability, better governance in the banking system, development of markets and further trade liberalisation, among others, are necessary for Bangladesh to help attain its desired economic growth for the current fiscal year (FY), 2014-15.
Besides, stronger attention to efficient implementation of infrastructure investments, with necessary changes relating to regulation and policy formulation are also needed.
The suggestions have been made by the US-based Citibank NA in its annual market update 2014, released in Dhaka on Wednesday.
The Citibank NA said the government has already set an 'ambitious' 7.3 per cent gross domestic product (GDP) growth target for the FY 15.
Achieving this will require the total investment to GDP ratio to rise by over 5.0 percentage points from 28.7 per cent in the FY 14 to 33.8 per cent.
"The overall growth outlook for the FY 15 (July 2014 - June 2015) is favourable and growth recovery has begun with the return of political stability," it observed.
The GDP growth for the FY 14 was 6.1 per cent, according to the Bangladesh Bureau of Statistics (BBS) data.
However, proposed salary hike of the government employees and administered price adjustments pose upside risks to inflation, according to the update.
"Inflation is expected to maintain a downward trend throughout the FY 15 on continued policy restraint," the Citibank NA noted.
The Bangladesh Bank has set a 6.5 per cent inflation target for the ongoing fiscal.
"Achieving the FY 15 inflation target will depend on international price trends as well as domestic demand and supply conditions," the update said.
The inflation reached 5.84 per cent in November from 5.74 per cent in the previous month due to a rise in house rent, transportation costs, education and medical expenses and other non-food items, according to the update.
"If oil prices in the local market are adjusted to reflect the slump in global oil prices, then it may further contribute to reduce inflation in the economy," it said.
The update also mentioned that with the current political stability and steady growth in demand for ready-made garment (RMG), the US$ 33.2 billion export target for the FY 15 seems attainable. "The long-term sustainable growth is pivoted on exploring new markets as well diversification of the export basket," it added.
The Citibank NA suggested the government for taking necessary measures to explore new job markets for sustaining the flow of inward remittance.
"To sustain the growth in remittance earnings, the government also needs to explore new job markets in Africa and South America with rising challenges in traditional Middle-East markets," the update noted.
It also said the current fiscal is portraying a different story, as the flow of inward remittances grew by 11.42 per cent to $6.20 billion during the July-November period of the FY 15, against $5.56 billion in the corresponding period of the previous fiscal.
siddique.islam@gmail.com
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