6.2pc GDP growth projected in current FY  

The World Bank has projected that Bangladesh will achieve a 6.2 percent GDP growth in the current fiscal year (2014-’15) against the government’s target of 7.3 percent.

Besides, the World Bank says, Bangladesh growth is likely to rise to 6.5 percent in 2015-’16 and 7 percent in 2016-’17 fiscal years.

The global lender made the projection in the World Bank Group’s Global Economic Prospects (GEP) report released globally on Wednesday.

wbThe World Bank report also projects that the economic growth in the South Asia region will hit 6.8 percent by 2017 from 5.5 percent in 2014.

The regional growth is projected to rise as remittances remain robust in Bangladesh and Nepal, reforms ease supply constraints in India and political tensions subside in Pakistan, and demand for the region’s exports firms.

In South Asia, the growth rose to an estimated 5.5 percent in 2014 from a 10-year low of 4.9 percent in 2013. But sustaining the pace of reform and maintaining political stability are keys to maintaining the recent growth momentum, the report said.

About the global economy, it said the global economic prospects will improve in 2015, but divergent trends pose downside risks.

“Following another disappointing year in 2014, developing countries should see an uptick in growth this year, boosted in part by soft oil prices, a stronger US economy, continued low global interest rates, and receding domestic headwinds in several large emerging markets,” according to the report.

After growing by an estimated 2.6 percent in 2014, the global economy is projected to expand by 3 percent this year, 3.3 percent in 2016 and 3.2 percent in 2017, while the developing countries grew by 4.4 percent in 2014 and are expected to edge up to 4.8 percent in 2015, strengthening to 5.3 and 5.4 percent in 2016 and 2017, respectively, the World Bank said.

“In this uncertain economic environment, developing countries need to judiciously deploy their resources to support social programs with a laser-like focus on the poor and undertake structural reforms that invest in people,” said World Bank Group President Jim Yong Kim.

According to the report, underneath the fragile global recovery lie increasingly divergent trends with significant implications for global growth.

Activity in the USA and the UK is gathering momentum as labour markets heal and monetary policy remains extremely accommodative. But the recovery has been sputtering in the Euro Area and Japan as legacies of the financial crisis linger. China, meanwhile, is undergoing a carefully managed slowdown with growth slowing to a still-robust 7.1 percent this year (7.4 percent in 2014), 7 percent in 2016 and 6.9 percent in 2017.

“Worryingly, the stalled recovery in some high-income economies and even some middle-income countries may be a symptom of deeper structural malaise,” said Kaushik Basu, World Bank Chief Economist and Senior Vice President.

“As population growth has slowed in many countries, the pool of younger workers is smaller, putting strains on productivity. But there are some silver linings behind the clouds. The lower oil price, which is expected to persist through 2015, is lowering inflation worldwide and is likely to delay interest rate hikes in rich countries. This creates a window of opportunity for oil-importing countries, such as China and India; we expect India’s growth to rise to 7 percent by 2016,” he said.

As per the report growth in the United States is expected to accelerate to 3.2 percent this year (from 2.4 percent last year), before moderating to 3 and 2.4 percent in 2016 and 2017, respectively. The forecast for Euro Area growth is a sluggish 1.1 percent in 2015 (0.8 percent in 2014), rising to 1.6 percent in 2016-17. In Japan, growth will rise to 1.2 percent in 2015 (0.2 percent in 2014) and 1.6 percent in 2016.

It said the global trade flows are likely to remain weak in 2015, while commodity prices are projected to stay soft.

“Risks to the global economy are considerable. Countries with relatively more credible policy frameworks and reform-oriented governments will be in a better position to navigate the challenges of 2015,” said Franziska Ohnsorge, Lead Author of the report.