BD needs to raise investments to achieve 7pc growth: SCB

Bangladesh will need to significantly increase its public sector investments and improve business climate to attract private investments in order to achieve a sustainable growth rate beyond 7.0 per cent by the next fiscal year (FY), 2016-17, according to Standard Chartered Bank (SCB).
The United Kingdom-based global bank also said Bangladesh's economy is on a solid ground with a 6.5 per cent expected growth, manageable fiscal deficit, surplus current account, and all-time-high foreign exchange (FX) reserve position.
But local politics along with a slowdown in the United States and the European Union still remain the biggest risk to its economy, the SCB noted.
The observations were made at a Global Research Briefing (GRB) session, held at SCB Bangladesh headquarters in Dhaka on Tuesday.
The bank's senior researchers, economists and policymakers, including Dave Murray, Head of Global Research, Edward Lee, Head of ASEAN Economic Research, Saurav Anand, Economist of South Asia, Priya Narain Balchandani, Director Energy Analyst of Global Research, and Divya Devesh, Asia FX Strategist, took part in the session.
SCB projected that Bangladesh Taka (BDT) may depreciate significantly against the US dollar by the end of this calendar year (2016), following the present rebounding trend of commodity prices, including that of fuel oil, in the global market.
The US dollar exchange rate against BDT may rise to Tk 82 by this December from the existing level, according to Divya Devesh, SCB Asia FX Strategist.
The US dollar was quoted at Tk 78.40 in the inter-bank forex market on Wednesday against Tk 78.43 of the previous level, market operators said.
The FX expert also said the exchange rate of the US currency against the BDT may reach Tk 79 by June.
Falling trend of inward remittance may push up the demand for the US currency, he noted.
The flow of inward remittances has been maintaining a declining trend since December, the Bangladesh Bank (BB) data showed.
Saurav Anand suggested the government to expedite implementation of the mega projects that will help increase overall investment in Bangladesh.
Currently, Bangladesh government is now implementing different mega-infrastructures, including Padma Multipurpose Bridge, Sonadia deep-seaport in Cox's Bazar, Dhaka-Chittagong four-lane highway, and Dhaka elevated expressway.
Despite global slowdown Bangladesh's growth would increase, driven by consumption boost mainly due to pay hike of the government employees, said Mr. Anand, who observes trends of Bangladesh economy.
He also said appreciation of BDT can also create impact on the country's export competitiveness and remittance inflows.
The real effective exchange rate of BDT, which is against trade related weighted basket of currencies, appreciated by close to 24 per cent in the last two years, according to the SCB expert.
BDT appreciated by 7.0-8.0 per cent against Euro in the last one year, and remained stable against the US dollar, he added.
He also suggested easing the process of doing business here to attract increased investment.
Mentioning this calendar year as a challenging one, Mr Murray said the prices of petroleum products and commodities are recently recovering in the global market.
"Global growth is soft, but not collapsing," the SCB said in its Global Economic and ASEAN and South Asia Outlook.
"We're at the dovish end of expectations on the US growth and FOMC (Federal Open Market Committee) Policy for 2016-17," the global bank explained.
It also said the importance of the rest of Asia (excluding China and Japan) is still rising.
"In Asia, the economies, able to implement their investment spending plans, can outperform." it noted.
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