Business | Economy
Asian Development Bank fears slump fallout will hit economy
The Asian Development Bank (ADB) fears Bangladesh will be exposed to the second round impact of global recession as it has projected this year's GDP growth at 5.6 per cent, the lowest in five years, which is down by 0.6 percentage points of the previous year's achievement.
- By Anisur Rahman, Correspondent
- Published: 23:01 April 3, 2009
- The financial district of Singapore. Much of Asia brims with confidence that its time has come, present savage recessions notwithstanding.
- Image Credit: Bloomberg News
Dhaka: The Asian Development Bank (ADB) fears Bangladesh will be exposed to the second round impact of global recession as it has projected this year's GDP growth at 5.6 per cent, the lowest in five years, which is down by 0.6 percentage points of the previous year's achievement.
The Manila-based international lender in its Asian Development Outlook 2009 released on Tuesday predicted the slowdown is not likely to wane in the next fiscal year, rather it may be more critical for Bangladesh with the economy growing at 5.2 per cent in the backdrop of a global recession the duration of which is still unknown.
"The government is to streamline its expenditure to create more jobs to help the poor get out of poverty," ADB's Bangladesh country director Paul J Heytens said launching the Outlook in the city.
The outlook projected inflation is projected at 7.0 per cent and the budget deficit at 4.7 per cent of GDP as the revenue collection would decelerate. However, the balance of payments is expected to show a tiny surplus, 0.2 per cent of GDP.
It suggested the government increase investment in the public sector through an annual development programme (ADP) and channel more funds to the market.
The ADB projection came days after Finance Minister Abul Maal Abdul Muhith said the government planned to introduce private-public partnership (PPP) schemes to support private sectors offering subsidies to overcome the challenge of recession.
Prime Minister Shaikh Hasina promised a "special package" to fight the fallout of the global recession amid calls for a 60 billion taka (Dh3.22 billion) bailout fund.
"I've already directed the finance minister and other concerned ministers to identify the sectors set to be hit by the global recession and recommend incentives to be provided to the affected ones," she told business leaders at her office.
Muhith identified education, health and human resources development as potential sectors for public-private investment in overcoming those challenges adding the PPPs had to be introduced in the budget and expanded as fast as possible.
"The new budgetary provision will also allow more investments from foreign and local entities."
The country's top business leaders earlier appealed for the bailout fund, proposing nearly 50 billion of it be spent to salvage the major export oriented garments and textile spinning sectors.
The apex Federation of Bangladesh Chambers of Commerce and Industries (FBCCI) sought the package which includes export sectors and other domestic industries for at least a year. But the prime minister's finance adviser Mashiur Rahman said the size of the government "stimulus package" would be much lower than the business leaders demanded.
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