2009年-世界发展银行全球_Bangladesh_-_State_of_the_Economy_and_Near_to_Medium-Term_Challenges_16页_257kb

Bangladesh: State of the Economy and Near- to Medium-Term Challenges

I. State of the Economy

A. Economic Growth

• Recent Performance: Bangladesh has experienced steady economic growth averaging 6% over the last four years, driven mainly by the industrial and services sectors.
• Agriculture: Expected to grow faster than the previous year (3.6%) due to favorable weather, increased government support, and higher market prices. Aman rice production is projected to reach 13.6 million tons, a 40% increase from FY08.
• Industry: Growth has slowed to 6.9% in FY08 due to energy shortages, infrastructure deficiencies, and political uncertainty. Continued investment in energy and infrastructure is crucial to restore near double-digit growth.
• Services: Robust growth (6.7% in FY08) supported by remittances and expanding sectors like telecommunications and real estate. Growth is expected to benefit from increased agricultural and industrial activity.

B. Inflation

• Trend: Inflation peaked at 11.6% in December 2007 and declined to 6% in December 2008, largely due to falling international prices and good domestic production.
• Food Inflation: Dominated inflation since FY03, driven by global price surges and domestic supply issues. With falling international prices, food inflation is expected to remain subdued.
• Monetary Policy: Bangladesh Bank has maintained a stable exchange rate to prevent imported inflation but may need more flexibility in the future to support export competitiveness and develop the interbank market.

C. Macroeconomic Management

• External Sector: The current account surplus of US$672 million in FY08 reflects resilience from strong exports and remittances. However, the current account turned into a deficit in October 2008 due to declining exports and remittances, but has since improved.
• Fiscal Management: The FY08 budget deficit was 3.7% of GDP, well below the revised target. The FY09 budget targets a 5% deficit and 2.8% domestic financing, which are considered reasonable but not sustainable long-term.
• Revenue Growth: Tax revenue growth slowed in the latter half of FY08, and import-based tax growth also declined. The government may need to focus more on domestic resource mobilization, such as increasing VAT and income tax collection.
• Expenditure Management: Current expenditures in the first half of FY09 grew by 68% compared to FY08, mainly due to increased salaries and allowances. Subsidies, particularly for petroleum, remain a significant portion of the budget, but may be reduced due to falling international prices.

II. Near- and Medium-Term Challenges

A. Near-Term Challenges

• Global Economic Crisis Impact: While the first wave of the crisis has not yet hit Bangladesh, the risk of a slowdown in exports and remittances is growing.
• Exports: The RMG sector, which accounts for over 75% of exports, is highly dependent on US and EU markets. Recent data shows a decline in export orders and prices, with some buyers demanding rebates and delaying payments. This could lead to a slowdown in export growth in Q3 of FY09.
• Remittances: Remittances, which are a key source of foreign exchange, are expected to slow due to the global recession and reduced demand for migrant labor in the Middle East. The decline in oil prices and economic slowdown in the GCC countries are major concerns.

B. Medium-Term Challenges

• Growth Targets: The Awami League aims to increase GDP growth to 8% by 2013 and 10% by 2021. This requires increasing the investment rate from 24.2% to 30% and then to 36% of GDP.
• Investment Constraints: Domestic savings are insufficient to meet investment needs, and international borrowing is difficult. A more favorable environment for foreign investment is needed.
• Poverty Reduction Strategy: The government plans to revise the poverty reduction strategy within six months of taking office, which is essential for attracting foreign investment and improving economic governance.
• Strategies for Growth: The World Bank suggests three key strategies: shifting from agriculture to industry and services, deepening global market integration, and fostering diverse urban centers. These require macroeconomic stability, improved infrastructure, a stronger financial sector, and better economic governance.

III. Policy Recommendations

1. Managing Trade Issues

• Increase exchange rate flexibility.
• Adjust export subsidies to manage trade imbalances.
• Enhance Duty Drawback and Special Bonded Warehouse facilities for exporters.

2. Remittances

• Implement legal reforms to improve remittance transfer and utilization.
• Allow private banks to use public bank networks in rural areas for remittance distribution.
• Relax controls on sending bank representatives in destination countries.
• Remove regulatory barriers to encourage diversified remittance products.

3. Budget Management

• Redirect savings from energy and urea subsidies to critical rural infrastructure and social security schemes.
• Use the budgetary savings of over $1 billion at current international prices to support development and poverty reduction initiatives.

IV. Outlook

• The global economic crisis is likely to impact Bangladesh's exports and remittances in 2009, but the country is in a strategic position to prepare for these challenges.
• The government has set up committees to monitor the crisis and recommend measures.
• The World Economic Outlook suggests a recovery by 2010, but Bangladesh must prepare for a potential slowdown in the short term.
• Sustaining macroeconomic stability, improving infrastructure, and deepening financial sector reforms are essential for long-term growth and poverty reduction.