Saturday, July 12 2014
VOL 21 NO 235 REGD NO DA 1589 | Dhaka, Thursday, July 10 2014
Posted : 10 Jul, 2014 00:00:00 AA-A+
Economic downturn halts but recovery remains fragile
Inertia in pvt investment persists amid simmering political discontent: Experts
Jasim Uddin Haroon

Country's economy has recovered, to some extent, from the downturn induced by tumultuous politics up to December last but economists see this development not strong enough--rather mild--to support sustained macroeconomic growth.

Many macroeconomic indicators like credits to the private sector, imports both in terms of opening and settlement of letters of credit (LCs) have surged in recent months.

According to Bangladesh Bank statistics, the credits to the private sector grew by 9.41 per cent during the July-May period last over that of the corresponding period of the previous fiscal (2012-13). Import payments grew 10.5 per cent during July-April period in 2013-14 over that of the corresponding period of the previous fiscal.

The imports of capital machinery in terms of settlement grew nearly 17 per cent during the period under review.

Ahsan H Mansur, executive director at the Policy Research Institute of Bangladesh (PRI), still sees no sign of a strong recovery in private-sector investment in relation to gross domestic product (GDP).

Private investment commensurate with the GDP is a precondition for higher growth-hence, better health of the economy and greater opportunities on the job market.

"The recoveries are still fragile and relatively weak to justify a robust pickup," Dr Mansur said.

He noted the unsettled political issues still simmering below the surface and remains a major cause for concern and uncertainty for private investors.

He said the recoveries will not help grow the economy over 7.0 per cent.

Dr AK Enamul Haque, senior researcher at the Dhaka-based Economic Research Group (ERG), terms this recovery as 'natural' as the investors are moving for investment.

"This is good sign for the economy," he said.

"There is some sort of instability on the political front, but investors are moving," Dr Haque said.

He thinks if implementation of the much-talked-about Padma bridge happens, the import of different machinery will see a surge.

Also, he goes on focusing the sunny side of the prospects, there might take place investment in power sector in the coming months. And it will also add impetus to import.

Dr Khandker Golam Moazzem, additional director at the Centre for Policy Dialogue (CPD), felt that the economy was picking up but in reality the pace so far attained is not strong.

"I know that there is investment in small units, not medium, let alone large units," Dr Moazzem said about the lacking in this vital sector.

As long as investment in large projects does not take place, the economy in real terms will not be buoyant, he remarked.

"In my view, the recovery is good sign for the economy but it is yet to reach the level of expectation," he said.

Dr Moazzem also said the entrepreneurs had mainly invested in some traditional sectors like apparels and frozen foods.

Many small sectors like jute and home textile have been suffering for losing competitiveness as the local currency appreciated against the greenback, he said.

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