DHAKA, Oct. 21 (NsNewsWire) — The World Bank said on Tuesday that it had trimmed Bangladesh’s growth forecast for the current fiscal year 2015-16 (July 2015 -June 2016) to 6.5 percent, citing uncertainty both from volatility in the global economy and on the domestic front as the key reasons, reports Xinhua.
The Washington-based lender said in its Bangladesh Economic Update for October 2015 that Bangladesh’s unresolved political uncertainty can hurt growth prospects by hindering confidence rebuilding, leading to a stagnation of private investment.
Prolonged slower growth in advanced and emerging markets may have an adverse impact on garment exports, which make up more than three fourths of the country’s annual income, thus widening the trade deficit, it said.
Zahid Hussain, lead economist at the Dhaka office of the World Bank, said Bangladesh’s economy is vulnerable on multiple fronts such as China’s economic transformation and the elusive increases in U.S. interest rates.
“Increased geopolitical tensions in the Middle East, Ukraine or parts of Africa could take a toll on confidence,” he added.
He predicted that a 6.2-percent inflation for the 2015-16 fiscal year would be within reach, given a cautious monetary policy and stable global prices.
Driven by the decrease in food prices, the country’s overall consumer inflation decreased to 6.4 percent in the 2014-15 fiscal year from 7.3 percent of the previous fiscal year.
The Bangladeshi government in June this year unveiled a record 3-trillion-taka (about 37.83 billion U.S. dollars) proposed national budget, targeting an economic growth of 7 percent for the current 2015-16 fiscal year.
In his budget speech, Bangladeshi Finance Minister AMA Muhith said, despite favorable macroeconomic situation and enhanced public investment, slow pace of private investment is largely responsible for hindering expected high growth.
About a week after the Bangladeshi government unveiled its national budget, the World Bank said that achieving a 7-percent economic growth target in the 2015-16 fiscal year will be challenging for Bangladesh, but not an impossible task. Enditem