Medium-term economic outlook favourable : BB

Bangladesh's medium-term economic outlook is favourable in the wake of its growing working age population and a sustain demand of products in the global market, the central bank said.
"The outlook for the Bangladesh economy is favourable over the medium term in light of a growing working age population and continued global demand for Bangladeshi products," the Bangladesh Bank (BB) said in its annual report for the fiscal year (FY) 2012-13, released Monday.
"Bangladesh currently benefits from a high share of working age people, generally defined as those between 15-60 years old, who can contribute to productive activities, raise income and overall economic growth," Dr. Hassan Zaman, chief economist of the BB, told the FE.
He also said this is the time to make the necessary investments in infrastructure and skills development as well as funded pension systems to make the most of this demographic dividend, which will only last another 15 years or so.
"Besides, the growing global middle class will sustain the demand for Bangladeshi core export products, provided we all take compliance issues seriously."
The BB in its report said faster growth of beyond 7.0 per cent will require sustained investment in infrastructure, especially in energy sector.
Investment as percentage of gross domestic product (GDP) increased to 26.8 in FY 13, which was 26.5 in FY 12. The private sector component of investment decreased from 20.0 in FY 12 to 19.0 in FY 13, while the public sector component of investment increased from 6.5 per cent in FY 12 to 7.9 per cent in FY 13.
The increasing share of public investment in GDP in FY 13 resulted from higher implementation rate of annual development programme (ADP) compared to that in the previous year, according to the report.
It also said the monetary stance of BB in FY 14 will target a growth path, aiming to bring average inflation down to 7.0 per cent, while ensuring that credit growth is sufficient to stimulate inclusive growth.
"Further reduction in inflation will be targeted in subsequent years," it noted.
The central bank has already revised its growth projection to the range between 5.8 per cent and 6.1 per cent from the previous range between 5.7 per cent and 6.0 per cent.
BB's current forecast is that output growth will pick up in the second half (H2) of FY 14, and this will partly make up for the losses faced in H1 of this fiscal. Its overall forecast for FY 14 ranges from 5.8 per cent to 6.1 per cent, and should there be no major disruption to the economy, output growth could be closer to 6.0 per cent, according to the BB's latest monetary policy statement (MPS), released on January 27.
"Bangladesh economy achieved a respectable growth of 6.0 per cent during FY 13 in a very challenging domestic and global economic environment," the report noted.
It also said using the FY 96 as the base year, the real GDP growth was 0.2 percentage point lower in FY 13 than 6.2 per cent in FY 12.