ADB report on the economy
Friday, 18 September 2009
The latest report of the Asian Development Bank (ADB) on the Bangladesh economy is a pointer to the need to do more in some areas to make the most by this country when the global economic recovery is taking longer than expected. The Bangladesh economy, as the report noted, has done reasonably well -- even better than many of its Asian neighbours -- in fiscal year (FY) 2008-09. Nonetheless, the signs are there that the delayed recovery of the global economy is taking its toll on the Bangladesh economy. Hence, the imperative need to improve performance in FY 2009-10, learning from the experiences of the previous fiscal.
The ADB report noted that the Bangladesh economy grew by 5.9 per cent in FY 2008-09 compared to the 6.2 per cent in FY 2007-08. Export growth was 10.3 per cent in FY 2008-09 in contrast to the 15.9 per cent in the FY 2007-08. Therefore, this is one area that needs very focused attention from the government. The slowed-down export growth is suggestive that the global economic recession is impacting on Bangladesh's export earnings. The country's export trade is mainly conducted in the rich and developed countries which are generally still under the influence of recession, in one way or other. Experts are now saying that it will take a longer period for them to come fully out of this recession.
The government of Bangladesh has otherwise been on the right track by preparing a package of programmes to help the export-oriented sectors in the early part of the current year. But the main export sector of the country, the garments industry, was earlier excluded from this special treatment. However, the latest indication suggests that some 'relief' would soon be provided to the recession-impacted ready-made garments (RMG) units. The RMG sector has been facing problems to keep its nose above the water in the face of the global recession and very close competition from rival exporting countries. Thus, extension of some supports to the garments sector would be considered important for export recovery as a whole.
Private sector growth was found to be slowing down remarkably to 14.6 per cent on year-on-year basis in June 2009, down from 24.9 per cent in June 2008. This figure is illustrative of the investment slump that has occurred and which must be pulled up to achieve the projected rate of economic growth for the current fiscal. One way of doing that would be proving though deeds and not words that government is effectively engaged in augmenting energy supplies in the short and medium terms. Investors will likely come forward the moment they get some credible signals that they can truly expect considerable improvements on the energy front fairly soon and that longer terms activities to that end would be continued.
The sagging investment situation also requires concentrated efforts in building infrastructures. Spending on infrastructures will significantly fill the void in private investments. Specially, the thrust in this area should be building infrastructures under the public-private partnership (PPP) model. This government has completed nearly eight months of its tenure. It should now be pro-active enough to complete the guidelines for investment under the PPP framework and to make the same known to the investors, sooner than later. Faster infrastructure building under the PPP will significantly increase the net of investments, meet the needs of business-supportive infrastructures, create large-scale employment and contribute to the growth of the economy as a whole.
The ADB report noted that the Bangladesh economy grew by 5.9 per cent in FY 2008-09 compared to the 6.2 per cent in FY 2007-08. Export growth was 10.3 per cent in FY 2008-09 in contrast to the 15.9 per cent in the FY 2007-08. Therefore, this is one area that needs very focused attention from the government. The slowed-down export growth is suggestive that the global economic recession is impacting on Bangladesh's export earnings. The country's export trade is mainly conducted in the rich and developed countries which are generally still under the influence of recession, in one way or other. Experts are now saying that it will take a longer period for them to come fully out of this recession.
The government of Bangladesh has otherwise been on the right track by preparing a package of programmes to help the export-oriented sectors in the early part of the current year. But the main export sector of the country, the garments industry, was earlier excluded from this special treatment. However, the latest indication suggests that some 'relief' would soon be provided to the recession-impacted ready-made garments (RMG) units. The RMG sector has been facing problems to keep its nose above the water in the face of the global recession and very close competition from rival exporting countries. Thus, extension of some supports to the garments sector would be considered important for export recovery as a whole.
Private sector growth was found to be slowing down remarkably to 14.6 per cent on year-on-year basis in June 2009, down from 24.9 per cent in June 2008. This figure is illustrative of the investment slump that has occurred and which must be pulled up to achieve the projected rate of economic growth for the current fiscal. One way of doing that would be proving though deeds and not words that government is effectively engaged in augmenting energy supplies in the short and medium terms. Investors will likely come forward the moment they get some credible signals that they can truly expect considerable improvements on the energy front fairly soon and that longer terms activities to that end would be continued.
The sagging investment situation also requires concentrated efforts in building infrastructures. Spending on infrastructures will significantly fill the void in private investments. Specially, the thrust in this area should be building infrastructures under the public-private partnership (PPP) model. This government has completed nearly eight months of its tenure. It should now be pro-active enough to complete the guidelines for investment under the PPP framework and to make the same known to the investors, sooner than later. Faster infrastructure building under the PPP will significantly increase the net of investments, meet the needs of business-supportive infrastructures, create large-scale employment and contribute to the growth of the economy as a whole.