ADB revises downward GDP growth projection to 6.5pc
Tuesday, 18 September 2007
FE Report
The Asian Development Bank (ADB) has revised downward its projection about the growth of Bangladesh's gross domestic product (GDP) for fiscal 2007-08 to 6.5 per cent from 7.0 per cent.
"The recent floods that affected around 25 per cent of the Aman crops across the country prompted the ADB to lower slightly the growth rate from its previous projection," chief economist of ADB's resident mission in Bangladesh Rezaul Karim said while launching its Asian Development Outlook (ADO) 2007 Update at its Shere-e-Bangla Nagar office.
It also foresees a inflation rate at 7.0 per cent in fiscal 2008, higher from its previous projection of 6.0 per cent. and a slightly wider current account surplus by 1.0 per cent from its previous forecast of 0.2 per cent.
"The growth and external outlooks remain positive though curbing inflation remains a challenge," the ADB forecast pointed out adding, "economic prospect will also depend on the caretaker government's success in maintaining political stability and broad public support."
The Manila-based multilateral donor agency's revised projection about the country's GDP growth is, however, 0.5 percentage points lower than the government's growth projection of 7.0 per cent for the fiscal 2008.
The GDP growth, inflation and current account surplus of the previous fiscal year, ended in June 2007, for Bangladesh came in close to the ADB projection made in March last through ADO 2007, the ADB noted.
The GDP growth in 2007 was 6.5 per cent as projected by the ADB, while inflation was 7.2 per cent, 0.2 per cent higher of its forecast of 7.0 per cent and the current account balance surplus was 1.4 per cent against the projection of 1.0 per cent.
Bangladesh faces various risks that could derail its projection, the ADB cautioned pointing out political unrest as the key one.
Improving confidence among businessmen and easing the mounting inflation, which already reached 10 per cent on point to point basis in July, 2007 are also among the challenges the country is facing, it said.
The government's recent administrative measures to counter inflation, such as investigations of certain businesses suspected of hoarding supplies, measures to regulate stock levels and prices, as well as its encouragement to new importers to enter the market and so induce greater competition appear to have had no discernible impact on inflation, the ADB report noted.
"They have, rather, created uncertainty in the business environment, contributing to price pressures," the ADB pointed out.
Commenting on the country's future potencies, the ADB Country Director in Bangladesh Hua Du said: "The ongoing corruption drive will lay foundation in the long run for future economic growth."
"We are very confident about restoration of confidence in business community," the ADB chief in Bangladesh said.
Bangladesh is currently passing through a transitional period for the national economy, she said.
Hua Du was upbeat about holding of the next general election as per schedule saying: "We have seen recently positive signs for holding of a free and fair election."
The government has clarified the roadmap, she added.
The ADB outlook clarified it further saying: "The government has indicated its commitment to completing electoral reforms by end-2008. Nevertheless, political uncertainty will prevail until new elections are held, slated before end-2008."
The ADB in its ADO 2007 Update, however, revised its 2007 growth projections for Asia's developing economies to 8.3 per cent from 7.6 per cent earlier, citing solid growth of China and India.
Strong growth in China (now put at 11.2 per cent from 10 per cent) and India (8.5 per cent from 8.0 per cent) will spearhead expansion, the ADB outlook maintained.
China is projected to grow by 10.8 per cent in 2008, revised from the previous estimate of 9.8 per cent made in March.
India's economy is expected to grow by 8.5 per cent next year, slightly higher than the 8.3 per cent growth forecast previously.
It said China is stoked by rising food prices and inflation pressures are building up, with expanding credit and strong grains in equity and property markets.
In India, it said, inflation has cooled, but the central bank remains vigilant and has not indicated it will ease interest rates.
The Asian Development Bank (ADB) has revised downward its projection about the growth of Bangladesh's gross domestic product (GDP) for fiscal 2007-08 to 6.5 per cent from 7.0 per cent.
"The recent floods that affected around 25 per cent of the Aman crops across the country prompted the ADB to lower slightly the growth rate from its previous projection," chief economist of ADB's resident mission in Bangladesh Rezaul Karim said while launching its Asian Development Outlook (ADO) 2007 Update at its Shere-e-Bangla Nagar office.
It also foresees a inflation rate at 7.0 per cent in fiscal 2008, higher from its previous projection of 6.0 per cent. and a slightly wider current account surplus by 1.0 per cent from its previous forecast of 0.2 per cent.
"The growth and external outlooks remain positive though curbing inflation remains a challenge," the ADB forecast pointed out adding, "economic prospect will also depend on the caretaker government's success in maintaining political stability and broad public support."
The Manila-based multilateral donor agency's revised projection about the country's GDP growth is, however, 0.5 percentage points lower than the government's growth projection of 7.0 per cent for the fiscal 2008.
The GDP growth, inflation and current account surplus of the previous fiscal year, ended in June 2007, for Bangladesh came in close to the ADB projection made in March last through ADO 2007, the ADB noted.
The GDP growth in 2007 was 6.5 per cent as projected by the ADB, while inflation was 7.2 per cent, 0.2 per cent higher of its forecast of 7.0 per cent and the current account balance surplus was 1.4 per cent against the projection of 1.0 per cent.
Bangladesh faces various risks that could derail its projection, the ADB cautioned pointing out political unrest as the key one.
Improving confidence among businessmen and easing the mounting inflation, which already reached 10 per cent on point to point basis in July, 2007 are also among the challenges the country is facing, it said.
The government's recent administrative measures to counter inflation, such as investigations of certain businesses suspected of hoarding supplies, measures to regulate stock levels and prices, as well as its encouragement to new importers to enter the market and so induce greater competition appear to have had no discernible impact on inflation, the ADB report noted.
"They have, rather, created uncertainty in the business environment, contributing to price pressures," the ADB pointed out.
Commenting on the country's future potencies, the ADB Country Director in Bangladesh Hua Du said: "The ongoing corruption drive will lay foundation in the long run for future economic growth."
"We are very confident about restoration of confidence in business community," the ADB chief in Bangladesh said.
Bangladesh is currently passing through a transitional period for the national economy, she said.
Hua Du was upbeat about holding of the next general election as per schedule saying: "We have seen recently positive signs for holding of a free and fair election."
The government has clarified the roadmap, she added.
The ADB outlook clarified it further saying: "The government has indicated its commitment to completing electoral reforms by end-2008. Nevertheless, political uncertainty will prevail until new elections are held, slated before end-2008."
The ADB in its ADO 2007 Update, however, revised its 2007 growth projections for Asia's developing economies to 8.3 per cent from 7.6 per cent earlier, citing solid growth of China and India.
Strong growth in China (now put at 11.2 per cent from 10 per cent) and India (8.5 per cent from 8.0 per cent) will spearhead expansion, the ADB outlook maintained.
China is projected to grow by 10.8 per cent in 2008, revised from the previous estimate of 9.8 per cent made in March.
India's economy is expected to grow by 8.5 per cent next year, slightly higher than the 8.3 per cent growth forecast previously.
It said China is stoked by rising food prices and inflation pressures are building up, with expanding credit and strong grains in equity and property markets.
In India, it said, inflation has cooled, but the central bank remains vigilant and has not indicated it will ease interest rates.