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Wednesday, November 3, 2010

Bangladesh Economic Update, World Bank

According to new World Bank Update on the Bangladesh Economy, the GDP growth of 5.8% in FY10 is noteworthy given the slow global recovery, severe power shortages, and labor unrest in the garments sector.

Main substances of the report:

Developments in FY10 

  • Growth was mainly driven by consumption demand (strong remittance inflows, rebound in construction activities; and growth in rural non-farm activities);
  • Inflation remained high and volatile due to continued volatility in food prices (The price of coarse rice in Dhaka in September 2010 was 50% higher relative to September 2009);
  • Exports and the terms of trade appear to have deteriorated due to slowest growth in readymade garments exports (1.2%) since FY02 arising from the global recession which caused a drop in retail sales in Bangladesh’s main export destinations.
Outlook for FY11
  • A higher GDP growth is projected to be 6.1-6.3% in FY11 because of the proposed higher public and private investment. However, this projection challenges the high growth target of the Government due to a weak global recovery which could dampen the recovery in exports and further slow down remittances and, of course, domestic energy shortages which pose the biggest threat to an increase in growth rates;
  • Fiscal pressures could grow in FY11 if food prices continue to rise

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