The New Nation - Internet Edition

Staff Reporter

Bangladesh Bank yesterday predicted that country's economy may achieve 6.5 per cent GDP growth in the current fiscal 2008-09 basing on the positive outcome of various reforms and improved performance by many productive sectors and application of better technology and skills in many other fields.

The central bank made the observation in its annual report 2007-08 released yesterday. It said based on continued positive development in various productive and service sectors, the country's GDP growth may also increase to 7.0 per cent next year to reach 7.2 per cent in 2010-2011.

To attain the targets, it said what the country needs is to ensure a smooth transition to democracy in the first place, while in the economic front; it should be able to keep inflation down.

The country would also require maintaining better macroeconomic stability, improved business and investment climate, achieving higher growth in industrial and service sectors and accelerated growth in agriculture to ensure food security, diversification of exports, skill development and application of better technology and continuation of financial sector reforms.

Bangladesh Bank said, all these factors will be able to bring about significant dent on the country's declining poverty level and improvement in the lot of the common people as envisaged in the Poverty Reduction Strategy Paper (PRSP), which now stands at the core of the country's development planning.

It also mentioned certain risk factors saying much of the growth forecast would depend on how the next government would be able to overcome them.

Some of these risks are inflationary build up, possible higher prices of fuel and other essentials in global market, impact of floods and climate change related disasters, infrastructure related impediments such as removal of gas,

electricity, port and transportation problems.

They also include possible market shrinkage of apparel products in the USA and other major markets consequent upon the current recessionary trend, slowdown in the flow of development assistance in the backdrop of global economic recession.

The economy may also face further risks if the forthcoming government fails to ensure food security, improve productivity and diversify exports to reduce dependence on limited number of exportable.

The report dwelt on the central bank's performance in many fronts in running a prudent, cautious monetary policy supportive to economic and business growth, alongwith various reforms to restructure the country's banking sector.

It put emphasis on maintaining a stable monetary and fiscal policy as well as adequate subsidy to farm inputs and allocation to social safetynet programmes.

The Bangladesh Bank identified labour unrest in the garment sector as a highly critical issue and emphasized the need for better owner-worker relations to avoid crisis that may bring setback to this highly competitive sector in the global market.

The report further stressed the need for improving the design and fashion wing of the garment sector, removal of infrastructural problems affecting production and shipments and creating a long term buyer-seller relation to plan its future growth.

The industry should also take step, it said, to widen the market access to countries like Australia and Japan, which now allow limited duty-free access but have bigger market prospects for Bangladesh exports.