WB retains lower GDP growth projection at 6.8pc for FY17 - Share market analysis of dhaka stock exchange, Bangladesh

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12 January, 2017 10:08 AM Source: New Age

The World Bank retained its lower economic growth projection at 6.8 per cent for the current fiscal year 2016-2017 for Bangladesh, 0.4 percentage points lower than the government estimate of 7.2 per cent.
The World Bank retained the lower growth projection mainly due to internal security challenges and weakening remittance that led dampening private consumption and investment.
‘Bangladesh’s gross domestic product growth was expected to ease to a still solid 6.8 per cent in the FY2017 from the official estimate of 7.1 per cent in the previous fiscal year,’ the multilateral lending agency said in its latest report.
The WB on Tuesday globally released its flagship report titled ‘Global Economic Prospects: Weak Investment in Uncertain Times.’
Earlier in October, the Washington-based lending agency made similar projection for Bangladesh.
‘Domestic security challenges, compounded weak external demand and a mild pickup in private investment, offsetting an uptick in infrastructure spending and increased public sector wages,’ the report read.
A slowdown in oil-rich Gulf Cooperation Council economies has led to receding remittances inflows to Bangladesh dampening private consumption and investment, it added.
The WB, however, projected that Bangladesh’s GDP growth would further edged down to 6.5 per cent in the next FY18 due to weak remittance inflows and subdued consumption.
The growth will rebound in the next two fiscal years of 2019 and 2020 supported by infrastructure spending and an increase in exports, it said.
An improved security situation is also expected to attract domestic private investment and foreign direct investment, the WB projected.
Construction of Padma Bridge connecting southwest of the region with the rest of the county and a liquefied natural gas terminal will alleviate infrastructure and energy bottlenecks in the medium-term, it said.
However, Bangladesh’s high recurring expenditures and stagnant revenue-to GDP ratio will likely pose obstacles for the funding of needed infrastructure development, the lending agency added.
The report said the WB identified some risks including persistent security, political tensions, slippages in addressing fiscal imbalances, further deterioration in financial and corporate sector stability for economic growth of Bangladesh and some other countries in South Asian region.
External risks including heightened policy uncertainty in the United States and Euro area, unexpected tightening of financing conditions, a jump in energy prices, and a prolonged slowdown in key export markets are moderate for the region, given the South Asia’s limited global integration, it said.
Growth in South Asian region is expected to pick up modestly to 7.1 per cent in 2017 with continued support from strong growth in India projected at 7.6 per cent while global economic growth is to accelerate moderately to 2.7 percent in the year, the WB said.  

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