BSS, Dhaka :
Asian Development Bank (ADB) forecasts a lower gross domestic product (GDP) growth in the fiscal year 2013-14 (FY2014) as private consumption and investment were affected by pre-election political unrest.
“Economic outlook for FY2014 remains subdued due to decline in remittances and weak domestic demand affected by prolonged unrest in the run up to the national election on January 5, 2014,” said Manila-based development partner in its “Bangladesh Quarterly Economic Update” released today.
For the sectors, agriculture growth is expected to rise because of the lower base in the past two years, it said, adding that the brisk industry sector growth is expected to moderate because of work stoppages and supply disruptions caused by political unrest.
“This decrease in industrial activity will likely slow service sector growth,” the ADB added.
It said the slowdown in private sector credit, decrease in industrial term loans, lower import of capital machinery, and rise in excess liquidity in the banking system point to lower private investment performance in FY2014. Fall in private investment is likely to be partly offset by a rise in public investment, it said.
The lending agency said agriculture growth, if normal weather prevails, is expected to increase in FY2014 due to lower base in FY2013 and FY2012. Nevertheless, it will not be as high as the 5.1 percent in FY2011 and 5.2 percent in FY2010 as marketing of non-crop agricultural products was affected by the disruptions in distribution network, it added.
Subdued external and domestic demand will slow industry sector growth in FY2014, it said adding that the performance of export and domestic market- oriented industries was affected by demand and supply disruptions in the lead up to the national election.
“Textiles, the country’s leading industry, may also beaffected if demand weakens in the European Union (EU) and buyers in both the EU and the US postpone orders from Bangladesh in response to the recurrent industrial accidents,” it added The ABD said that industrial production might be hindered by the growing gas shortage and expected rise in electricity prices.
Growth in the service sector in FY2014 will moderate because of slower industry sector growth together with output lost due to pre-election unrest, it said.
Inflation is expected to rise in the coming months, the ADB said, adding that the expected increase in domestic fuel and electricity prices, and increase in public and private (garment) sector wages may put pressure on prices in the coming months.
It said the annual development program (ADP) utilization rate remained low at 27.0 percent during July-December 2013 and spending of domestic resources was 30.0 percent, while utilization of foreign-aided projects stood at 24.0 percent.
Attaining the annual export target of $30.5 billion will be a challenge, the ADB said, adding that slow recovery in major economies and weaker garment export expansion in view of some unfavorable buyer reaction in the aftermath of the fatal factory fires and the horrific factory collapse may disrupt further export opportunities.
While net Foreign Direct Investment (FDI) inflows increased marginally, net foreign assistance decreased drastically due to the unfavorable political environment, the ADB said.
