5:18 pm - Monday June 14, 0010

Economic growth would slow to 5.6pc this fiscal: ADB

The Asian Development Bank (ADB) forecast 6.2 percent growth for Bangladesh economy for the coming 2014-15 financial year (FY145), though the economic growth would slow to 5.6 percent in the end of the current 2013-14 financial year (FY14) because of decline in remittances and export growth.

The ADB made the prediction in its quarterly economic update for March, 2014, released yesterday, as Finance Minister AMA Muhith is preparing to announce the national budget for the coming fiscal year in less than a month’s time.

adb1The forecast, however, was lower than the 7.3 percent GDP growth rate, which would be projected in the next budget scheduled to be unveiled on June 5.

“Growth is expected to rebound to 6.2 percent in FY15, aided by higher remittance and export growth, as growth prospects in the United States (US) improve and the eurozone posts a mild recovery,” the ADB said.

It said domestic demand was depressed in the first half of the year, as the prolonged political unrest ahead of the January elections lowered consumer and investor confidence.

This is reflected in lower private credit growth, declining imports of consumer goods and capital machinery, and modest growth in the import of raw materials, the report said.

The report said that the fiscal policy was prudent, as the government sought to keep unproductive spending in check, cut subsidies, and advance tax policy and tax administration reforms.

It suggested mobilizing more public resources to finance large infrastructure investment in power, gas, ports, railways, roads, and urban services; and to enhance the skills base to help diversify the economy and raise global competitiveness.

“The tax base needs to be expanded by reducing exemptions and exclusions, and improving tax administration through simplifying laws and procedures, improving logistics and automation, and reducing scope for evasion with the introduction of advanced auditing and enforcement techniques,” the ADB advised.