Overview

TheAsian Development Outlook 2004 (ADO), an annual ADB publication that forecasts economic trends in the region, says the recent data pointed to an expected increase in industrial production and agriculture in the years ahead.

The forecast marks an acceleration of growth from the country's recovery in agriculture and industry in FY 2003 (1 July 2002 to 30 June 2003), when gross domestic product (GDP) growth rate was an estimated 5.3%. "The macroeconomic prospects for FY2004-2005 appear favorable with upside potential from a more buoyant global economy," the ADO says.

Agricultural growth is expected to increase, with preliminary indications suggesting a bumper aman (winter harvest) crop.

A higher budgeted fiscal deficit for FY2004 and a more relaxed monetary stance are expected to spur domestic demand.

Services sector activities, particularly trade, transport, and finance are likely to improve significantly with the anticipated further recovery in export-oriented manufacturing and continued strong food crop production.

Although growth in manufactured exports is projected to moderate with the phasing out of the Multifiber Arrangement (MFA) at the end of 2004, domestic-oriented private economic activity is expected to strengthen as the Government makes progress on structural and economic reforms.

The ADO calls for further improvements in competitiveness of the garment industry as well as an improvement of the overall environment for investment climate including infrastructure development.

The current account surplus is likely to fall considerably during the remainder of FY2004, but remain marginally positive the whole year. This forecast is contingent on the growth in imports continuing to offset the rise in exports. It is also reliant on remittances from overseas workers not changing dramatically due to the instability in the Middle East and fallout from the ongoing fight against terror.

Inflation is likely to increase to 4.7% in FY2004 due to an increase in food prices. Inflation rate for FY2005 is projected to be at 4.2%.

"Bangladesh's economy is on right track and the reforms are also going onto right way," said Sadiq Ahmed, sector director of Poverty Reduction and Economic Management Team of World Bank (WB) after a meeting with Finance and Planning Minister M Saifur Rahman at the latter's office here on Thursday. Talking to journalist, Sadiq, who led a five-member delegation including country director of WB Christine Wallich in the meeting, said the reforms are government's own agenda and the WB has been providing technical supports to that based on the experiences in others countries. "We discussed the technical aspects of the reform process and shared experience of each others in the meeting," he added.

Referring to the success story of country's private sector banks, the WB executive also observed that those could be examples for nationalised commercial banks in the country.

Talking to the journalists, Finance Minister Saifur Rahman said the WB delegation in the meeting expressed their satisfaction at the reform process going on and the overall economic situation in the country.

Describing the meeting with the WB team as a follow up one, he said reform in power sector particularly in DESA came up for discussion and added "we agreed that bill collection by the DESA should be strengthened further". He said Annual Poverty Reduction Strategy Programme (APRSP) and overall economic situation in the country also came up for discussion.

Finance Secretary Zakir Ahmed Khan, governor of Bangladesh Bank Dr Fakhruddin Ahmed and chairman of National Revenue Board Khairuzzaman Chowdhury were present at the meeting. 

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