SwissPro | Frankfurt, 25.04.2016
IMF retains economic growth outlook for Bangladesh
The International Monetary Fund has also kept economic forecast for Bangladesh unchanged at 6.8 percent for this fiscal year after a same type of forecast by Asian Development Bank. Retaining its last October forecast, IMF estimated the same GDP growth outlook for Bangladesh. However, the IMF’s projection is closer to the Asian Development Bank’s forecast of 6.7 percent and the government’s 7.05 percent. Recently, the government claimed that the GDP growth has already exceeded 7 percent in first nine months of the current fiscal year.
Fitch affirms stable outlook for Bangladesh
Fitch, a leading global credit rating agency, has maintained its ‘BB-‘ rating for Bangladesh, due to its foreign currency earnings and high and stable real economic growth. Strong and relatively stable foreign currency revenue from remittances and garment exports support the external balances and overall credit profile, the New York-based agency said. Exports have only been moderately affected by the current global trade slowdown, growing at 5.9 percent over the year to January 2016, compared with 9 percent a year earlier.
Bangladesh among top 10 FDI hotspots in Asia Pacific
Bangladesh is placed among Asia Pacific’s top 10 Foreign Direct Investment (FDI) hotspots. The other Asia Pacific FDI hotspots are China, Indonesia, Malaysia, Vietnam, the Philippines, Myanmar, Thailand, India and Sri Lanka. Over the next decade, the Asia Pacific is forecast to be the fastest growing region of the global economy that offers the biggest potential gains for FDI. It added that amonst the other South Asian economies, Sri Lanka and Bangladesh are expected to show rapid growth over the next decade. Despite political turbulence, Bangladesh has made considerable economic progress over the past decade, with average annual GDP growth exceeding 6.5 percent per year since 2006. Bangladesh has emerged as an attractive location for FDI into low-cost textiles, clothing and footwear manufacturing because of its relatively low-wage costs compared to coastal China.
Deep cut in subsidy help offset government revenue shortfall
The government has cut the volume of subsidy by nearly 26 percent to BDT 189.0 billion for the ongoing fiscal year for hardly having to hand out cash support for fuel. There are few more sectors where the subsidy estimates also fell significantly. They attribute the lower spending of fund supports mainly to the fall in the prices of many raw, intermediate and finished products on the international market. This is actually a gain in ‘terms of trade’ on account of fall in the prices of fuel and other commodities in the international market. The downsized subsidy is naturally compensating the fiscal pressures as the national board of revenue has been missing its target. It had a big target of BDT 1.76 trillion which cam down to BDT 1.5 trillion in the revised budget for the current fiscal year. There would be much gain for the economy if the government had adjusted prices of key petroleum products which have been falling since the middle of 2014.
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Christian Forthuber
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