BB governor hopeful of 6pc growth despite grim WB, IMF forecast
Friday, 3 April 2009
FE Report
Bangladesh Bank governor rejected grim growth prognosis by the World Bank and the International Monetary Fund (IMF), saying the economy is poised to grow around six per cent this fiscal despite global meltdown.
The World Bank said Bangladesh would clock 4.5 per cent growth in the current financial year --- the lowest in seven years--- while IMF put the figure at around 5.0-5.5 per cent for 2009 as the economy is mired by global recession.
But central bank governor Salehuddin Ahmed came out strongly in favour of a robust growth, as he sees fewer bumps in the three remaining months of the current fiscal year.
"We're hopeful of achieving around 6.0 per cent growth in 2008-09 fiscal if the overall economic trend continues and the country does not face any major disasters," Mr. Ahmed said after a meeting with an IMF delegation.
"It could come down to 5.6 to 5.8 per cent. But will it drop down to 4.5 per cent as predicted by the World Bank? Only three months are left and I am not sure whether there will be a huge recession that can drag down growth to that level," he said.
Both the multilateral agencies have said that the global economic recession is having a knock-on effect on Bangladesh's two main economic levers-exports and remittance --- with recovery seem unlikely before 2011.
On Tuesday Asian Development Bank (ADB) also lowered its Bangladesh growth projection to 5.6 per cent for the current fiscal year and 5.2 per cent for next fiscal year.
Mr. Ahmed said the central bank would "deconstruct" the World Bank projection before making its own growth forecast for the current fiscal.
"We will review how the World Bank's estimated the latest growth forecast for Bangladesh. We will see on which basis they made the projection," the BB governor said.
The central bank had projected a growth of around 6.5 per cent for 2008-9 fiscal when it released its monetary policy in July last year - at time when the world looked perfectly safe from the United States' housing price bubble.
But as the US sub-prime housing crisis hit the global financial behemoths and snowballed into a full-blown economic recession, the BB lowered the growth projection to over 6.0- 6.2 per cent.
Last month both the BB and Bangladesh Bureau of Statistics forecast the GDP growth in the current fiscal at 6.0 per cent as the exports slowed to a meagre 1.2 per cent in the second quarter due to the meltdown.
The governor ruled out bailout package for the overall economy, saying the government should instead help out the sectors already affected by plunging export orders.
He said remittance remained robust although overseas employment plummeted by 38 per cent in the first three months of 2009.
"Remittance is still in good shape. We got figure of March and it shows good trend. We are not seeing overseas employment numbers as we have expected. But it has not drastically declined," he said
He said the main impact of the global meltdown would be felt in 2009-10 fiscal year, export is set to cool further and there will be fewer jobs available in the Middle-East and Southeast Asia.
"The next budget would be very crucial," Mr. Ahmed said, adding the government should increase spending in infrastructure, especially energy, in the budget to boost up machinery import and spur economic activities.
Bangladesh Bank governor rejected grim growth prognosis by the World Bank and the International Monetary Fund (IMF), saying the economy is poised to grow around six per cent this fiscal despite global meltdown.
The World Bank said Bangladesh would clock 4.5 per cent growth in the current financial year --- the lowest in seven years--- while IMF put the figure at around 5.0-5.5 per cent for 2009 as the economy is mired by global recession.
But central bank governor Salehuddin Ahmed came out strongly in favour of a robust growth, as he sees fewer bumps in the three remaining months of the current fiscal year.
"We're hopeful of achieving around 6.0 per cent growth in 2008-09 fiscal if the overall economic trend continues and the country does not face any major disasters," Mr. Ahmed said after a meeting with an IMF delegation.
"It could come down to 5.6 to 5.8 per cent. But will it drop down to 4.5 per cent as predicted by the World Bank? Only three months are left and I am not sure whether there will be a huge recession that can drag down growth to that level," he said.
Both the multilateral agencies have said that the global economic recession is having a knock-on effect on Bangladesh's two main economic levers-exports and remittance --- with recovery seem unlikely before 2011.
On Tuesday Asian Development Bank (ADB) also lowered its Bangladesh growth projection to 5.6 per cent for the current fiscal year and 5.2 per cent for next fiscal year.
Mr. Ahmed said the central bank would "deconstruct" the World Bank projection before making its own growth forecast for the current fiscal.
"We will review how the World Bank's estimated the latest growth forecast for Bangladesh. We will see on which basis they made the projection," the BB governor said.
The central bank had projected a growth of around 6.5 per cent for 2008-9 fiscal when it released its monetary policy in July last year - at time when the world looked perfectly safe from the United States' housing price bubble.
But as the US sub-prime housing crisis hit the global financial behemoths and snowballed into a full-blown economic recession, the BB lowered the growth projection to over 6.0- 6.2 per cent.
Last month both the BB and Bangladesh Bureau of Statistics forecast the GDP growth in the current fiscal at 6.0 per cent as the exports slowed to a meagre 1.2 per cent in the second quarter due to the meltdown.
The governor ruled out bailout package for the overall economy, saying the government should instead help out the sectors already affected by plunging export orders.
He said remittance remained robust although overseas employment plummeted by 38 per cent in the first three months of 2009.
"Remittance is still in good shape. We got figure of March and it shows good trend. We are not seeing overseas employment numbers as we have expected. But it has not drastically declined," he said
He said the main impact of the global meltdown would be felt in 2009-10 fiscal year, export is set to cool further and there will be fewer jobs available in the Middle-East and Southeast Asia.
"The next budget would be very crucial," Mr. Ahmed said, adding the government should increase spending in infrastructure, especially energy, in the budget to boost up machinery import and spur economic activities.