The New Nation - Internet Edition

THE growth rate for the economy officially projected early in fiscal year 2007-8 is 7 per cent. But worries are surfacing as to whether this growth rate is attainable. The floods have caused a slowdown in the economy that may continue in the remaining part of the year. However, even before the flood struck, symptoms of a slowdown were noted. The same was reflected in dwindling investment operations. Investments in enterprises-specially by the private sector of a country-do not suggest an uptrend. The growth in bank credits signify increases or decreases under new investment operations. But bank credit growth from January to May of the present year was only 2.03 per cent compared to 10.01 per cent growth in the corresponding period of the previous year, according to reports. Similarly, export growth which was some 25.80 per cent last year has declined to 16.45 per cent this year. The rate of actual foreign investment made in the economy has been insignificant.

The housing and construction sector in recent years was proving to be a dynamic one contributing progressively and significantly to the GDP. Unlike other sectors, its capacity for multiplier effects on other sectors or to create demands in them and in creating income and employment, are considered to be high. This sector is showing drop in sales of apartments to the tune of 50 per cent in the last six months. Expert observers of the economy are saying that continuation of the present trend could mean little economic growth in the present year. For the first time in years, the Bangladesh economy could experience a setback with growth dropping well below even 5 per cent.

While there are a multiplicity of factors that may be cited to explain this slowdown it has appeared from different assessments that the main reason lies in businesses not taking usual interest in their occupations, to come forward to invest and engage in business operations. And this is linked to fear. The leaders of a number of big business houses remain in jail. Individuals are now scared of buying cars or flats out of an apprehension that doing this would invite taxmen to enquire about the legitimacy of the source of the money. A general fear has gripped the business community that it is safe to be immobile with their money. Thus, the circulation of money or resources has reduced in many cases and this may cause economic stagnation. In South Korea, the main proprietor of a world famous company, was arrested and jailed for corruption recently. But this has not resulted in stoppage of full functioning of his giant industrial conglomerate. The government there decided that it was too big a national asset to be sacrificed for the corruption of a single person. They ensured full functioning of the industrial empire while also punishing its owner in 'proportion' to his crime. The same model should apply in case of the business conglomerates in Bangladesh.