Muhith hopes to achieve 7.2pc GDP growth target

Finance Minister AMA Muhith still sounded optimistic Wednesday about attaining the target of 7.2 per cent growth in gross domestic product (GDP).
"If the industrial production picks up and Aman as well as Boro harvests are satisfactory, the growth target may be achieved," the finance minister said while presenting the first quarterly report on the state of Bangladesh economy in the Jatiya Sangsad (JS).
The finance minister said the target could be easily achieved, if there was no general strike. The strikes affected the private investment significantly and the agricultural sector also did not grow as envisaged by the government, he added.
Earlier in February last he said the GDP growth would fall by 1.0 per cent because of the restive politics late last year, although the International Monetary Fund (IMF) and the Bangladesh Bank (BB) forecast the GDP growth would fall by more than 1.0 per cent, as the economy bled substantially at the fag end of 2013.                
The finance minister said the main risk, among others, remained the much less supply of energy than required for investments in the private sector.
He said the energy crisis might affect the private investment in the country during the fiscal year and thus affecting the GDP growth target.
The finance minister noted the private consumption might be affected in the current fiscal year following negative growth in the inflow of remittances.
"The aggregate demand may not reach its expected level," Finance Minister observed while placing the report in the parliament.
Mr. Muhith saw challenges to stimulating private investments and maintaining macro-economic stability.
 "The government may review GDP target of 7.2 per cent in the second half considering the risks and recent performances of different sectors," he noted. "In my mind, any revision of the GDP should be done during the second half of the fiscal year," he said.
Mr. Muhith, however, said there were now many signs that the industrial sector was picking up. The finance minister said deficit financing remained much below the expected level.
He said higher sales of national savings certificates would help fund the budget deficit.
Mr. Muhith said the expected growth in the broad money (M2) being pursued by the central bank was helping reduce the rate of inflation in the country.
He said the credit flow to the private sector dropped to 11.1 per cent during the quarter under review against 19.9 per cent of the corresponding period.
He, however, said the credit flow to the public sector grew to some extent to 9.8 per cent during the first quarter of the fiscal over its corresponding period of a year earlier.
Mr. Muhith said the monetary policy and credit policy remained active to boost credit flow to the productive industrial sector.
He said: "We're giving agriculture the same priority as is done for the industry."
The first quarterly report said it would be possible to keep inflation within the targeted rate of 7.0 per cent for the current fiscal.
However, Mr. Muhith saw some challenges to attaining the inflation target including pay hikes both in public and private sectors.
Supply chain disruption during the prolonged restive politics, risks stemming from high inflation rate in India and rising prices in global oil markets were also seen as major risks for reaching the target. In India, the rate of inflation increased by more than 9.0 per cent on an average in recent months.
It said Indian inflation affected prices of essential goods in Bangladesh and thus led to rise in the inflation rate.
The report reads: "Despite the risks, the government will not review its projected inflation  target."
The government will place another economic report for the period of July-December before the Jatiya Sangsad on March 20.