Recession effects to linger over economy: ADB

Star Business ReportAsian Development Bank yesterday projected Bangladesh's GDP growth at 5.2 percent for 2010, fearing continuous fallout from the global economic turmoil. ADB's forecast for this fiscal year is less than the government projection that economic growth may cross 6 percent. 

Thee country recorded GDP growth at 5.9 percent last fiscal year. Pointing to last year's adverse climate and low prices of agricultural produce and poor infrastructure, including gas and power scarcity, the multilateral lending agency suggested Bangladesh put all efforts in improving its investment climate, upgrading infrastructure, reducing power and energy shortages and accelerating economic reforms. ADB also projected a slowdown in agriculture and industrial growth. "The effects of the global crisis on Bangladesh economy in FY2010 are likely to be deeper than in FY2009," said the ADB quarterly update report released at a press conference at its Dhaka office. "As Bangladesh felt the effect of the global crisis late it would also bottle out late," said Zahid Hossain, head of country programming for Bangladesh Resident Mission of ADB. Paul Heytens, the country director, also spoke on the occasion. 

He made it clear that amendments in the Public Procurement Act would not disrupt execution of the projects funded by ADB. Terming export sector as the main driver of Bangladesh's GDP growth, Zahid Hossain said although exports grew well last fiscal year, this year the rise is negative. The agriculture sector growth rate, according to the ADB report, is expected to slow down to 4.1 percent in FY2010 from 4.6 percent in FY2009. This fiscal year, Aus output is not good due to drought. Also, late rainfall hampered Aman cultivation. This also caused lower projection of farm output. On industrial growth, it said adverse effects of the global economic slowdown are expected to dampen export sector growth in FY2010, which, in turn, will hit domestic industrial production. It also said the deficiency in power, gas and other basic infrastructure are the major supply-side bottlenecks of growth in industry, expectedly 6 percent in FY2010. ADB projected 5.5 percent growth in the services sector in FY2010, which was 6.3 percent in FY2009. 

Thee report also pointed out that slowdown in imports will affect the transport sector. The telecommunications sector is likely to be moderate following a robust growth last fiscal year. Banks and insurance companies will continue to be affected by sluggish investment activities, the ADB said. It also said slower growth in private sector credit and decline in exports and deceleration in remittance growth will have direct and indirect effects on the economy. 

Inn addition, investor sentiment has not fully revived following the initial uncertainty on the extent and depth of the likely impact of the crisis on Bangladesh economy. To enhance growth prospects, the ADB report said domestic demand and diversification of exports need to be boosted. It also stressed faster implementation of annual development programme. It further suggested greater emphasis on supporting agriculture and rural development, small and medium enterprises, human resources development and social safety nets. The focus, it said, should be on creating job opportunities, increasing public spending and enhancing public and private investment. Source:thedailystar.net/