Kazi Zahidul Hasan :
Finance Minister AMA Muhith recently said that Bangladesh would come out from 6 per cent GDP growth trap this fiscal, as political environment remained calm and stable.
“A 7 per cent growth is expected if we take the volume of current economic activities into account,” Finance Minister told journalists on his 83rd birthday at his Secretariat office.
The statement of the elderly Cabinet Minister came as a wonder to economists and other observers who foresee that such a growth may not be achievable given the current situation of the National Economy.
Muhith earlier said that corruption eats up 2 to 3 per cent of Bangladesh’s GDP and another 1 per cent of it is lost due to political instability.
And if Bangladesh really achieves the 7 per cent GDP growth, then after deducting 3 per cent on account of corruption and other misuse, the real GDP growth is to be only 4 per cent.
People are at a loss to believe what is the real GDP growth. The Minister is expected to clear the confusion explaining his own observations from the reality, they said.
“There is no sign in sight to achieve a 7 per cent GDP growth this fiscal despite prevailing calm situation in the country’s political arena,” Dr Zahid Hussain, Lead Economist of the World Bank’s (WB) Bangladesh Office, told The New Nation on Friday.
He said political stability also contributes to GDP growth. Besides, private and public investment, export and import, revenue collection, ADP implementation, remittance inflow and necessary infrastructures are the other components that also support growth.
“If we look into such components, private sector investment was not picking up, revenue collection
remained far behind the target, remittance and export growth remained flat and ADP implementation remained poor suggesting that Bangladesh was going to miss the 7 per cent GDP growth target set for the current fiscal,” he added.
Dr Zahid Hussain said, private sector investment is a key to accelerate the GDP growth. But it remained stagnant for the last few years due to perennial infrastructure deficits, bureaucratic bottleneck and regulatory framework complexity.
“Bangladesh economy has the potential to grow at a rate of 7 to 7 per cent per annum. But it fails to achieve the milestone due to above mentioned bottlenecks. If these bottlenecks are addressed it may come out from 6 per cent growth trap,” he added.
The World Bank’s economist said, “Corruption is an old issue and it is definitely bringing leakage on GDP growth. If corruption is contained, the economy may expand further taking Bangladesh economy towards a high growth trajectory.”
When asked, he said, in my mind, the Minister talked about the real GDP growth of 7 per cent leaving out the corruption issue.
The WB earlier said that Bangladesh would achieve 6.7 per cent GDP growth in the current fiscal year (2015-2016).
“The economy of Bangladesh, under any circumstances, would not achieve 7 per cent growth this year,” Dr AB Mirza Azizul Islam, former Finance Adviser to the Caretaker Government, told The New Nation yesterday.
He said, Bangladesh’s economic expansion is largely depending on adequate investment. But it is battling to expand over the years due to investment crunch.
“The proportion of investment in the GDP is now hovering at 28.7 per cent and if we want to expand the economy to 7 per cent the overall investment needs to be accelerated to 34.03 per cent. So, the task to accelerate the GDP growth to 7 per cent under the present investment scenario is more than difficult for the government,” he noted.
Mirza Aziz mentioned that overall private investment remained subdued due to eroding investors’ confidence resulted from the prevailing uncertainty in the political arena and infrastructure bottleneck.
“Investors have taken a ‘wait and see policy’ under the prevailing situation. Stability in political arena and good governance could help regain the confidence of the investors. A renewed investors’ confidence can help accelerate overall investment and later it would help expand the economy to 7 per cent or more,” he added. “Attaining a 7 per cent growth this year is a mirage for the government when many of the key economic indicators showing signs of potential slowdown,” Dr Salehuddin Ahmed, former Bangladesh Bank (BB) Governor told The New Nation on Friday. He said, Bangladesh could maintain an average 6 per cent growth for the last seven years although it has the potential to grow at 7 per cent per year. It mainly fails to overcome the ‘growth trap’ mainly due to lack of necessary investment, regulatory reforms and access to credit to the small and medium enterprises” he added.
When asked, Dr Salehuddin Ahmed said, the Bangladesh economy, at best this year, can grow to 6.5 per cent despite the prevailing calm situation in the political environment.
Finance Minister AMA Muhith recently said that Bangladesh would come out from 6 per cent GDP growth trap this fiscal, as political environment remained calm and stable.
“A 7 per cent growth is expected if we take the volume of current economic activities into account,” Finance Minister told journalists on his 83rd birthday at his Secretariat office.
The statement of the elderly Cabinet Minister came as a wonder to economists and other observers who foresee that such a growth may not be achievable given the current situation of the National Economy.
Muhith earlier said that corruption eats up 2 to 3 per cent of Bangladesh’s GDP and another 1 per cent of it is lost due to political instability.
And if Bangladesh really achieves the 7 per cent GDP growth, then after deducting 3 per cent on account of corruption and other misuse, the real GDP growth is to be only 4 per cent.
People are at a loss to believe what is the real GDP growth. The Minister is expected to clear the confusion explaining his own observations from the reality, they said.
“There is no sign in sight to achieve a 7 per cent GDP growth this fiscal despite prevailing calm situation in the country’s political arena,” Dr Zahid Hussain, Lead Economist of the World Bank’s (WB) Bangladesh Office, told The New Nation on Friday.
He said political stability also contributes to GDP growth. Besides, private and public investment, export and import, revenue collection, ADP implementation, remittance inflow and necessary infrastructures are the other components that also support growth.
“If we look into such components, private sector investment was not picking up, revenue collection
remained far behind the target, remittance and export growth remained flat and ADP implementation remained poor suggesting that Bangladesh was going to miss the 7 per cent GDP growth target set for the current fiscal,” he added.
Dr Zahid Hussain said, private sector investment is a key to accelerate the GDP growth. But it remained stagnant for the last few years due to perennial infrastructure deficits, bureaucratic bottleneck and regulatory framework complexity.
“Bangladesh economy has the potential to grow at a rate of 7 to 7 per cent per annum. But it fails to achieve the milestone due to above mentioned bottlenecks. If these bottlenecks are addressed it may come out from 6 per cent growth trap,” he added.
The World Bank’s economist said, “Corruption is an old issue and it is definitely bringing leakage on GDP growth. If corruption is contained, the economy may expand further taking Bangladesh economy towards a high growth trajectory.”
When asked, he said, in my mind, the Minister talked about the real GDP growth of 7 per cent leaving out the corruption issue.
The WB earlier said that Bangladesh would achieve 6.7 per cent GDP growth in the current fiscal year (2015-2016).
“The economy of Bangladesh, under any circumstances, would not achieve 7 per cent growth this year,” Dr AB Mirza Azizul Islam, former Finance Adviser to the Caretaker Government, told The New Nation yesterday.
He said, Bangladesh’s economic expansion is largely depending on adequate investment. But it is battling to expand over the years due to investment crunch.
“The proportion of investment in the GDP is now hovering at 28.7 per cent and if we want to expand the economy to 7 per cent the overall investment needs to be accelerated to 34.03 per cent. So, the task to accelerate the GDP growth to 7 per cent under the present investment scenario is more than difficult for the government,” he noted.
Mirza Aziz mentioned that overall private investment remained subdued due to eroding investors’ confidence resulted from the prevailing uncertainty in the political arena and infrastructure bottleneck.
“Investors have taken a ‘wait and see policy’ under the prevailing situation. Stability in political arena and good governance could help regain the confidence of the investors. A renewed investors’ confidence can help accelerate overall investment and later it would help expand the economy to 7 per cent or more,” he added. “Attaining a 7 per cent growth this year is a mirage for the government when many of the key economic indicators showing signs of potential slowdown,” Dr Salehuddin Ahmed, former Bangladesh Bank (BB) Governor told The New Nation on Friday. He said, Bangladesh could maintain an average 6 per cent growth for the last seven years although it has the potential to grow at 7 per cent per year. It mainly fails to overcome the ‘growth trap’ mainly due to lack of necessary investment, regulatory reforms and access to credit to the small and medium enterprises” he added.
When asked, Dr Salehuddin Ahmed said, the Bangladesh economy, at best this year, can grow to 6.5 per cent despite the prevailing calm situation in the political environment.
