Asian Development Bank said that the global recession has started affecting Bangladesh economy, exposing its near-term growth prospects to challenges, and suggested a massive campaign to generate domestic resource to offset the impact.
“With the financial crisis worsening into a global recession, the real economy (of Bangladesh) has begun to be affected. Exports and remittance growth have both moderated, slowing GDP growth in the near term,” the Manila-based Asian Development Bank (ADB) has said in its Bangladesh Quarterly Economic Update for March 2009, released on Thursday.
The government needs to generate massive domestic resources by carrying out effective revenue reforms to increase public sector investments to address the recession fallouts, It said.
The ADB’s comments came as the Bangladesh Bank on Thursday admitted that the current global meltdown was still a big challenge for the economy that is likely to hit the export growth, the flow of remittances and foreign fund inflow.
Although the Bangladesh economy has remained somewhat unaffected from the global recession, significant downside risks remain especially relating to the country’s exposure to real economy effects of the financial crisis through exports, remittances, and foreign capital inflow channels, it said.
“The continuing slowdown of global growth, especially growth in advanced economies, may pose a big challenge for our economy if it persists for long,” Habibullah Bahar, Economic Advisor of the Bangladesh Bank, said.
The ADB, however, said despite the slow growth, Bangladesh would perform better than most Asian countries as it has avoided the first round impacts of the global meltdown.
“Bangladesh is doing well within the South and south-east Asia. Its macro economic management was very very good despite the global recession,” Paul J Heytens, ADB’s country director briefed journalists while releasing the economic update in Dhaka.
Asked about the economic growth, the ADB country director, Paul J Heytens, said it might be above 5 per cent but much would depend on how long the recession will continue.
The World Bank earlier feared Bangladesh to witness its lowest ever GDP growth in seven years in the current fiscal a day after the Asian Development Bank (ADB) predicted the country to be exposed to the second round impact of global recession.
According to the World Bank’s Global Economic Prospect (GEP) 2009 released last month, Bangladesh’s GDP growth in the current fiscal would be 4.5 percent, the lowest in past seven years.
The ADB earlier projected this year’s GDP growth at 5.6 per cent, the lowest in five years, which is down by 0.6 percentage points of the previous year’s achievement.
Bangladesh Bank initially projected 6.5 per cent rate of GDP growth in the current fiscal, but Finance Minister A.M.A Muhith on Wednesday said that the growth would be around 6 per cent.
ADB last month offered an additional amount of USD 200 million as budgetary support while the European Union promised assistance to help the country tackle the fallout of global recession.
The assurances came as Prime Minister Sheikh Hasina’s now five-month old government earlier announced a Taka 3,424 crore stimulus package to cushion the blow of global economic downturn alongside a plan to cut 10 percent government jobs to clop public spending through suspending recruitment in vacant posts.
(The Financial Express – Updated: Jun 05, 2009)
For full ADB report – “Bangladesh Quarterly Economic Update for March 2009” click,