bdnews24.com :The World Bank says Bangladesh GDP growth for 2015-16 is unlikely to cross 6.3 percent.In its June 2015 report on “Global Economic Prospects”, the global lender says Bangladesh is still hamstrung by the adverse impact of political violence on exports in the previous fiscal. “In Bangladesh, the growth forecast for FY 2015 has been revised down on account of recent political tensions. The forecast is now 5.6 percent, compared with 6.4 percent in the previous forecast and 6.1 percent in FY 2014,” the report said.The Bangladesh Bureau of Statistics (BBS) has forecast a 6.51 pc growth this fiscal. “As tensions settle, growth should pick up in line with a recovery in exports and investment. Consumption should also remain supported by resilient remittance inflows, particularly following the resumption of migration of Bangladeshi workers to Saudi Arabia.””With the economy running at capacity, growth is expected to remain at close to potential over the forecast period,” the World Bank report said. If stability prevails, the strong domestic demand base, gradually improving investment climate and moderate single digit inflation are expected to raise GDP growth to 6.3 percent, Zahid Hussain, lead economist of WB’s Dhaka office, said.Sustaining the current political stability will be ‘most critical’ for achieving the rising growth path envisaged in the report, Hussain said.Recovery in the US and the Eurozone should boost garment exports, while the opening of new markets and deeper penetration of existing markets for Bangladeshi labour should increase remittances, the report forecasts.Hussain said the WB forecast was made taking into consideration the loss suffered due to political unrest.The WB forecast said the Bangladesh economy will benefit from good harvests and rising agricultural productivity.But foreign investments will grow very slowly for a host of reasons. The banking sector was also a cause for worry, like in neighbouring India, with too much ‘idle loans’ on its books and much loss predicted, the WB report said.Latest statistics indicate 10.47 percent of the loans in Bangladesh’s banking sector are ‘bad loans’ defaulted by borrowers.Finance Minister AMA Muhith in his budget speech has forecasted the GDP growth in the next fiscal year to be 7 percent.A range of steps in power, energy and communication sectors along with development of ports and economic zones have been taken to facilitate the high economic growth, Muhith said.The pay rise for government staff and strong remittance flows would increase consumer spending, the finance minister has hoped.”Above all, we expect that good sense among the political parties for the greater interest of the people will ensure political stability.”The World Bank comes out with its forecast for the world economy twice a year-once in January and once in June.The WB also cut back on its global growth outlook for this year and urged countries to “fasten their seat belts” as they adjust to lower commodity prices and a looming rise in US interest rates.In its half-yearly Global Economic Prospects report, the global development lender predicted the world economy would expand 2.8 percent this year, somewhat below its 3 percent prediction in JanuaryKaushik Basu, the WB’s chief economist, said the Federal Reserve should hold off on a rate hike until next year to avoid worsening exchange rate volatility and crimping global growth, according to Reuters.It said low commodity prices, especially the roughly 40 percent drop in oil prices since last year, had hurt commodity exporters more than anticipated.The global lender has also warned countries to prepare for higher US interest rates, which would raise borrowing costs for developing economies.”We at the World Bank have just switched on the seat belt sign,” Basu said in a press conference in Washington. “We are advising nations, especially emerging economies, to fasten their seat belts.”The World Bank predicted that India would be the fastest-growing major economy for the first time this year, growing at a rate of 7.5 percent, up from the previous forecast of 6.4 percent.But the World Bank cut its 2015 growth forecast for developing countries to 4.4 percent, from 4.8 percent in January, pointing to the drag of expected recessions in Brazil and Russia.It also lowered the growth outlook for the United States to 2.7 percent this year, from 3.2 percent in January, and to 2.8 percent next year, from a previous forecast of 3 percent.The US economy slumped at the beginning of 2015 due in large part to bad winter weather, a strong dollar, port disruptions and deep energy sector spending cuts.
