Kazi Zahidul Hasan :
The economy has begun to show signs of slowing down taking negative impacts of an election year.
Economic analysts said that policy uncertainty forced investors and businessmen to hold their investment plan sending a negative impact in the overall economic activities.
“The economy’s recent sluggishness can be explained by election mania. Uncertainties are surrounding over future government’s economic policies which keep investors more cautious and it thereby slowed down the economy,” Dr Zahid Hussain, Lead Economist, World Bank’s Bangladesh office, told The New Nation yesterday.
He said the slowing economic trend could be easily gauged from falling private sector credit growth and capital machinery import. However, rising exports and remittance earnings have acted significantly to prevent the economy from further deceleration.
“Private sector investment remained stagnant due to the political uncertainty and weak institutional capacity. The situation worsens further in the run up of the national polls,” added Dr Zahid Hussain.
He said such a tendency is nothing new if we review the macroeconomic trends in election years in the past. Even, the GDP growth fell in an election year.
“The growth is also expected to fall this year,” he added.
When asked, Dr Zahid Hussain said that the current trend of the economy is expected to prevail up to first quarter of next year. The economic activities may be accelerated later with exerting economic policies of the new government.
“Any election year brings with it a sense of uncertainty, and many business owners could be hesitant to make decisions affecting the long-term during such an ambiguous time,” Dr Salehuddin Ahmed, former Bangladesh Bank Governor told The New Nation yesterday.
He said the slowing credit growth and sharp fall in LC opening indicates that economy enters into a sluggish phase in the run up of next elections. The situation may improve only after peaceful transition of power to the new government.
When asked, Dr Salehuddin Ahmed said, “Private sector credit growth dropped significantly in September as both lenders and borrowers remained cautious ahead of the national elections.”
The credit growth in the given month registered a 14.67 per cent growth, down from 14.95 per cent month earlier, according to the latest data of Bangladesh Bank (BB).
Even, the LC opening during the first quarter of this fiscal (July-September) witnessed a 75 per cent fall to US$ 386 million from US$1558.66 million during the corresponding period of last fiscal.
Admitting the current economic situation, an anonymous government policy maker said that the government could merely refocus on economic policies until the elections.
“Despite the low potential for conflicts in the upcoming general election, investors and the business community have taken a ‘wait and see mode’ leading to a slow pace of private investment and business activities,” he added.
He, however, expressed his optimism over achieving this fiscal’s GDP growth target taking advantage of a relative clam in the country’s political climate.
The government earlier set a target of 7.8 per cent GDP growth for the fiscal 2018-19.
However, a report of the World Bank Group said Bangladesh economy would grow at an average of 6.7 per cent a year over fiscals 2018-2020, benefiting from strong domestic demand and strengthening exports.
