The growth of GDP in last year was above 6% but it has started to decline and is expected to go down below 5.7%. This is mainly because of the fall in export since export consist of 20% of GDP in Bangladesh. Moreover, investment and consumption also is decreasing along with the decline in growth in manufacturing and service sectors.
The growth of GDP in Bangladesh depend mainly on the industrial and the agricultural sectors. In FY2006-07, the growth rate was 6.43% that was estimated to be 6.42% by the BBS. This is mainly due to the decline in agricultural sector. Despite positive growth in the forestry sub-sector, the agricultural sector was largely affected by the Sidr, that had consequent effect on the agricultural sector till now.
The Asian Development Bank (ADB) recently projected the lowest GDP growth for Bangladesh in five years starting from 2009 due mainly to impacts of the global turnmoil. Thus the economic growth is slowing down because of decline in exports and remittances and lower domestic demand. Thus industrial growth is suffering.
According to provisional estimates, the rates of domestic and national savings stand at 20.08 and 29.23 % of GDP in FY 2007-08. It is to be noted that the rates for FY 2006-07 were 20.35 % and 28.66 % respectively. The rate of investment may decline to 24.16 % for FY 2007-08 which stood at 24.46 % in the previous year. In the aggregate investment for FY 2007-08, the public sector accounts for 5.01 % and private sector accounts for 19.15 %, which were recorded at 5.54 % and 19.02 % respectively in FY 2006-07.
Bangladesh's growth outlook remains fairly robust, down by only half a %age point to 5.6 % in 2009 (Table: 3).
Asian Development Bank forecasts dip in Bangladesh GDP for 2009-10
Apr 01, 2009 (BBC Monitoring via COMTEX) --
ADB predicted this year's growth at 5.6 %, down by 0.6 %age points of the previous year's achievement and around one %age point lower than the central bank's projection of 6.5 % for the current financial year. We expect economic activity to slow further to 5.2 % in 2009-10. Bangladesh achieved over 6 % growth since 2003-04 except 5.96 % in 2004-05 for damage to crops for floods.
The government to invest more to address infrastructure constraints, especially power generation and gas exploration.
Accelerating implementation of the annual development programme and supporting small and medium enterprises have become essential to absorb the likely soaring unemployment shocks in the wake of decelerating external demand.
As FDI (foreign direct investment) in gas and power is unlikely to materialise soon because of the global financial turmoil, the government needs to mobilise its own resources and tap external assistance.
Industrial growth will slow to 6.6 % this fiscal year from 7.6 % last year mainly on declining export demand.
Sliding consumer spending will push down the services sector growth at 6 % from 6.7 % in 2007-08.
If normal weather prevails, agriculture output is to rise by 4 % this year, the report said.
Inflation is expected to be at an average of 7 % this fiscal year, a significant decline from 9 % projected earlier, because of the falling global commodity and fuel prices, the report said. Inflation is likely to stay at 6.5 % in 2009-10.
Despite a drop in export and remittance earnings Bangladesh's external current account is expected to show a small surplus in this fiscal year, the report said.
But a poor revenue collection is a concern for Bangladesh, which needs additional funding to continue priority public spending.
Domestic productivity and competitiveness should get boost to help the country retain export market share and diversify destinations as well, it said.
In a bid to stoke domestic demand, the government has already formed a high-powered taskforce to devise how it can help the businesses absorb the recession shocks.
Replying to a query, the ADB country chief said the Bank...
Please join StudyMode to read the full document