As the domestic economy hit a soft patch in the immediate past year owing to several challenges in various macroeconomic fronts, analysts urged the government to take all-out measures to revive private investment so that growth can be sustained.
“Over the last few years, private sector investment remained subdued due to lack of business confidence. Such a sluggish investment trend has had an impact on employment generation,” Dr AB Mirza Azizul Islam, former Finance Adviser to the Caretaker Government told The New Nation.
He said the growth of credit flow to the private sector has dropped below 10 percent in November last year signaling the sluggishness of economic activities. “Only improvement in the business environment and reform measures can boost private investment,” he added.
When asked, Mirza Aziz said the economy is facing three most important challenges-boosting private investment, generating employment and addressing banking sector distress. “If these issues remain unsettle, the national economy will face challenges to sustain growth when several odds like sluggish investment, fall in exports and drop in capital machinery import have already appeared in the scene,” he added.
The government has set a target of 8.2 per cent gross domestic product (GDP) growth for the current fiscal year (FY2019-20).
“Achieving an 8.2 per cent GDP growth is almost impossible given the current trend of the economic activities,” Mirza Aziz said.
Bangladesh’s economic growth hit the highest at 8.15 per cent in fiscal 2018-19, riding on buyout exports of readymade garments (RMG), rising inward remittances and sustained growth in agriculture and public investment in big infrastructure projects.
“It’s a matter of concern that private sector investment is not growing in line with the current economic perspective,” said economist Dr Ahsan H Mansur, adding that main factors that contributed to the investment crunch are lack of business confidence, high interest rates, poor infrastructure and unsuitable law and regulations.
He said the recent spike in government’s bank borrowings has also negatively impacted private sector investment.
When asked, Dr Ahsan H Mansur said, the economy is now in a ‘depressed mood’ due to lack of necessary investment, slump in external trade and banking sector malady. “A credit boost to the private sector, easing cost of doing business and policy supports to labour intensive industries can help stimulate the economy afresh.”
