The New Nation - Internet Edition

Staff Reporter

Predicting tough times for the incoming elected government, the World Bank yesterday said the country's economy might shrink during the current 2008-09 fiscal in the wake of the global economic recession.

It said though the state of Bangladesh economy is now stable it could slow down in the next couple of months under the impact of global financial crisis. The government should, therefore, take proper measures for tackling the situation with proper plans in the economic sector, WB suggested. The WB observation came at a workshop on "Global Financial Crisis and its likely impact on Bangladesh" at the office of the World Bank at Sher-e-Bangla Nagar in the capital.

Xian Zhu, WB Country Director, presided over the workshop while Vinaya Swaroop, a leading economist, presented the keynote paper. Zahid Hussain, senior economist and Mehrin A Mahbub of the bank also attended it among others.

Vinaya Swaroop said under the negative impact of the global financial crisis Bangladesh's economy might be affected in the near future. The export earnings and remittances are likely to reduce in size to some extent, he noted.

He said that the present caretaker government might go without a scratch, but the next elected government shall be facing the challenges of the global economic meltdown.

He said the budget for the fiscal 2008-09 estimated the deficit at 5.0 percent when the prices of food and fuel were at their peaks. The reduction in commodity prices will help reduce the extent of subsidy, he added. He pointed out that a slowdown in exports and remittances as fallout of the recession would in turn affect the country's economic growth.

He suggested sending more workers abroad for achieving the remittance target for the current fiscal year.

"Export earnings would grow by 5 percent in the remaining nine months of the fiscal. This is much below the level of 9 percent required to achieve the fiscal's target of US$ 16.4 billion," he said adding that

Bank is still not pursuing the idea of devaluation of Taka as suggested by the private sector.

The Country Director of the World Bank recommended implementation of ADP and large infrastructure projects to manage the impact of the crisis.

"The World Bank is ready to assist Bangladesh for expanding its safety net programme," said Xian Zhu.

The World Bank projects that in case of worst scenario, the rate of growth might come down to 4.8 percent from the present rate of 6.5 percent.