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Saturday, December 31, 2011

Views of Professor Wahiduddin Mahmud

The Daily Prothom Alo publishes some views of renowned economist Prof. Wahiuddin Mahmud on recent economic development.

Major points:
1. It is appreciable that GDP growth remained between 6-7% despite several constraints. However, GDP growth was largely dependent on agricultural production, RMG export, production of small and medium scale industries and service sector. A promising investment didn't realized, without which a high GDP growth will not be sustainable.
2. Risks to the economic stability increases due to higher domestic demand compared to domestic supply.
3. New risks to the economic management and stability arises, not because of the fact that the economy is stagnant, but because the government is desperate to maintain high GDP growth.
4. Steps to maintain economic stability and to contain inflation are absent due to the lack of policy coordination.
5. There are certainly a few lacks in implementing regulation in the whole financial sector. Stock market crash is a good example. Bangladesh Bank's activity as a regulatory body was not effective due to unexpected political influence and lack of political commitment.
6. Lack of coordination was present between monetary policy announced by Bangladesh Bank and fiscal management.
7.  The government must focus on large projects in government expenditure management. Resource utilization,  priority-based expenditure approach and maintaining project quality were not in the priorities.

Here is the link.

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