Bangladeshi officials are disputing a new World Bank forecast that Bangladesh’s economy may shrink by 1 percent this fiscal year thanks to an opposition-led economic blockade and strike, which largely shut the nation down for three months.
Finance Minister Abul Maal Abdul Muhith dismissed the bank’s figures as wildly exaggerated.
“The World Bank, ADB [Asian Development Bank] and IMF [International Monetary Fund] always give wrong information. They always make wrong predictions,” he told local journalists.
According to the report, a nationwide work stoppage and transportation blockade called in early January by the opposition Bangladesh Nationalist Party (BNP) – combined with deadly political violence in the streets – may have brought about U.S. $2.2 billion in lost growth.
As a result, the World Bank forecasts that the nation’s gross domestic product (GDP) will grow 5.6 percent instead of a potential 6.6 percent this fiscal year.
Although the loss is only one percentage point, it marks a setback for a country like Bangladesh that is striving to become a middle-income country by 2021 by accelerating its economic growth.
“Continued polarization between the government and the opposition alliance is the main source of uncertainty for Bangladesh’s otherwise favorable economic outlook,” the reports says.
“In addition to causing over 120 deaths and hundreds of injuries, this recent resurgence of political unrest is taking a heavy toll on economic activity, in particular the services sector, agriculture, exports, and non-formal sector businesses,” the World Bank adds.
The bank based its figures on daily losses sustained during the three-month strike and blockade by the country’s three major sectors: agriculture, industry and services, said Zahid Hossain, chief economist at the World Bank’s Dhaka office.
“We haven’t taken into consideration the damage caused to properties and wealth. The bank has only calculated the loss caused in the daily production in the three sectors,” he told BenarNews.
The bank’s figures differ sharply with nationwide economic losses calculated by the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) in February, when the strike and blockade were still on.
According to the trade association, the country had then lost U.S. $20 billion from the strike and blockade, as well as related violence.
Government officials, on the other hand, predict that the economy will still grow to between 6.5 and 7 percent this fiscal year, despite productivity lost to the turmoil.
Muhith, the finance minister, said he was confident the economy would rebound and that it would grow by close to 7 percent. He did not say by how much Bangladesh had lost in potential economic growth.
But at a news conference on Wednesday, Planning Minister A.H.M. Mostofa Kamal said the economy had only lost 0.1 percent of GDP as a result of the recent turmoil.
From July 2014 through March 2015 – the first three quarters of the 2014-15 fiscal year – the economy grew by 6.5 percent, he said.
‘We must ensure political stability’
Meanwhile, at least one analyst questioned the World Bank’s forecast about reduced GDP this year.
“I think it’s not realistic to say that the economic growth would be lowered by one percent. The economy is likely to do better, as it did last time when the country was hit by another period of prolonged political unrest in 2013,” Monowar Mostofa Jolly, executive director of Development Synergy, an independent think-tank, told BenarNews.
In fact, an earlier World Bank prediction was off the mark, when it forecast that GDP would only growth by 5.7% in fiscal year 2013-14 because of political instability then. The economy ended up adding 6.2 percent to GDP, because of a spectacular rebound in the export and service sectors.
Yet the Bangladeshi economy can only keep growing if investors feel confident enough that the country’s politics won’t put their investments at risk, said Debaprya Bhattacharya, a leading economist with the Centre for Policy Dialogue, an independent research organization.
“We must ensure political stability, accountability and good governance in order to restore investors’ confidence, which would boost economic growth,” he told the media.