Two pieces of news -- one cheerful, other disappointing

Two pieces of news have appeared in the media at short intervals engendering mixed feelings of optimism and disappointment. To the cynic, they may even appear to cancel each other out being seemingly contradictory to each other.
The Asian Development Bank (ADB) has observed in its recent report that the preliminary government economic growth estimates in Bangladesh for Fiscal 2017 (ending in June) beat the forecasts of Asian Development Outlook (ADO) 2017. In the ADO 2017, published in April this year, ADB opined Bangladesh economy will grow to 6.9 per cent in FY 2017 but Bangladesh's gross domestic product (GDP) growth reached 7.24 per cent in FY 2017, exceeding all the previous records.
In a supplement to its ADO 2017 report released recently (July 20, 2017) ADB upgraded its growth outlook in the region from 5.7 per cent to 5.9 per cent in 2017 and from 5.7 per cent to 5.8 per cent for 2018. The smaller uptick in the 2018 rate reflects a cautious view on the sustainability of the export momentum gained by countries in the region, including Bangladesh. This seems to foreshadow a future forecast for a smaller increase in GDP growth for Bangladesh if things remain unchanged. But if Bangladesh can turn a corner in respect of boosting exports in spite of uncertain global prospects for trade ADB's cautious speculation may not reflect reality.
According to ADB Outlook 2017 the agricultural sector in Bangladesh contributed more to GDP than expected. |The growth in the sector was higher because of favourable climate and market conditions. Services growth also outperformed expectations. These positive developments were supported by solid performances in wholesale and retail trade, real estate, hotels and restaurants and transport sectors.
Inflation forecasts for South Asia have been cut by ADB to 4.2 per cent from 5.2 per cent in 2017 and to 4.7 per cent from 5.4 per cent in 2018 supported by lower increases in consumer goods prices. Among the South Asian countries Bangladesh is experiencing a steady decline in non-food inflation, reflecting favourable international prices, according to ADO 2017.
The improved prospects for GDP growth in Bangladesh, Nepal, Bhutan and India have been underpinned by strong private consumption which has become the largest contributor to growth in recent years. This development holds out the hope that slowdown in exports will be compensated by domestic consumption. Globally, if there is a contraction in trade as a result of protectionist measures in the major importing countries, countries like Bangladesh that depended on export-led growth will have to rely increasingly on domestic market. Increase in GDP and per capita income will support this re-balancing of the economy if and when the trade crunch comes.
Steady increase in GDP with resultant increase in per capita income in Bangladesh will have to come through increase in investment. Here the news is not very encouraging. In spite of the importance of and contribution by the public sector investment seen in recent years, the private sector has to be the engine of growth in Bangladesh as has been the case in the emerging countries. Public sector investment has inherent and built-in drawbacks in speedy implementation and in achieving efficient use of resources which will take time to remove through reforms. Private sector investors have historically shown greater dynamism and efficiency and also stronger motivation spurred by profit motive.
But the records show tardy progress in private investment during the last five years. According to Bangladesh Economic Review 2017, published by the Ministry of Finance, in 2012-2013 private sector investment accounted for 21.28 per cent of GDP. After five years, in 2016-2017, it rose to 23 per cent, an increase of less than 1.0 per cent. On average, annual increase in private sector investment has been around 1.0 per cent of GDP only. This sluggish growth in private sector investment has not been compensated by higher rate of public sector investment. It rose to 7.3 per cent in 2016-2017 from 6.6 per cent in 2012-2013 according to the Economic Review. Together, investment by the two sectors amounted to 30.3 per cent of GDP. This percentage has to reach at least 35 if the country hopes to attain middle-income status by 2020.
There are several impediments to increase investment in Bangladesh which have been mentioned for the umpteenth time. Lack of adequate infrastructure, paucity of electricity and gas and bureaucratic red tape have been singled out as the main hindrances. Besides these, private sector regularly carp about excessive tax burden. Slowly, but steadily, government has been trying to overcome these obstacles. Significant progress has been made in road transportation in recent years. New ports are being developed while facilities in existing ports have been expanded. Power generation capacity has been increased through rental power plants while electricity has been imported from neighbouring countries and new power plants are being set up. Arrangements are afoot to import liquefied natural gas (LNG). The Padma Bridge construction is going ahead, with 43 per cent of work already completed. Ports are being kept open for 24 hours to facilitate exports and imports. Imposition of new VAT law of 2012 has been postponed in compliance with demand from the private sector. Banks are awash with investible funds and the lending rates have been reduced. For investors unable to repay on time, re-structuring, even writing off of part of the overdue interest have been done to give incentives to private sector investors. But bank financing of private sector investment has been hamstrung by wilful default by some investors. Transfer of capital through mis-invoicing and money-laundering, on the other hand, is depriving the country of investible funds.
The private sector cannot act like 'cry baby' and at the same time indulge in these malpractices. They have to show patriotism to fulfil the dream of the teeming millions for a better life. It should be recognised by them that the good fortune they are enjoying is because of the sacrifices made by millions of men, women and children during the war of liberation. Like late President Kennedy, their souls are calling forth, 'ask not what the country can do for you, ask what you can do for the country'. The private sector must rise to the occasion. On their part, public sector functionaries have to demonstrate their commitment, honesty and hard work to discharge their obligations to the taxpayers who are maintaining their standard of living. If a mighty power like America can fall back on economic nationalism to ensure economic resurgence how can Bangladeshis baulk at the need to change their mindset? It is time that we remember the Shakespearean quote, 'the fault lies not in our stars but in ourselves'.                   
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