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ADB projects GDP growth below 6 pc for 2007-08 PDF Print E-mail
Friday, 29 February 2008

Head of Asian Development Bank's resident mission Hua DuStaff Correspondent

GDP growth is projected to fall this year compared to the previous fiscal year, head of Asian Development Bank's resident mission Hua Du said Thursday.

GDP growth is expected to be below 6 percent for FY 2008, compared with 6.5 percent the previous year, said the ABD's Dec 2007 Quarterly Economic Update for Bangladesh released Thursday.

Inflationary pressures are continuing to heighten during the current fiscal because of the shortfall in domestic production, aggravated by high food prices in international markets, the report said Inflation on a point-to-point basis rose to 11.6 percent in Dec 2007, from 10.1 percent in July 2007.

"Subsidies to oil and fertiliser added to inflationary pressures, and under pricing of energy products poses a substantial risk to the country's macroeconomic management," Hua Du told a press briefing on the report. Containing high inflation remains a major challenge with GDP growth slwoing, the report said.

ADB said the economic slow-down is due to erosion of business confidence, extensive flooding and Cyclone Sidr, as well as a dip in the external demand for garments affecting manufacturing.

The output of medium and large scale manufacturing rose only 3.5 percent in the first five months of the financial year, accordingly, though small scale manufacturing, catering mostly to the domestic market, was not affected.

The outlook points to the need to boost confidence, restore flood and cyclone-affected infrastructure and heighten competitiveness in the global market.

The ADB country director said that uncertainty among businessmen has started to ease, however, as the government is taking measures to boost business confidence.

The quarterly report says that exports have been gradually increasing, with an upward trend in knitwear exports in particular. The foreign exchange reserve stood at $5.4 billion at the end of January 2008, up from $5.1 billion at the end of June 2007.

The donor agency, whose remit is to reduce poverty in the Asia and Pacific region, said an effort should be made to divert remittances from informal networks to official transfers. It also stressed government initiatives to increase remittance inflow through the migration of more semi-skilled and skilled workers.

The report pointed out that slow progress in the annual development programme continues to undermine efficient management of public expenditure, as well as delay efforts to reduce poverty.

The ADB considers that enhanced monitoring of the government's poverty reduction strategy is needed, with greater project implementation to meet strategy targets. Hua Du said she was confident the national polls would be held on time and the government was doing a "tremendous job" in voter registration.

The ADB country director also called on the media to address the issue of avian flu in a more informative manner. "I have found that media reports on avian flu have created panic among the general people," Hua Du said.

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