Published in The Daily Observer on Thursday, 19 May 2016
Huge investment needed to surpass 7 pc GDP: Economists
Abu Sazzad
Bangladesh needs huge investment to achieve over 7 per cent Gross Domestic Product (GDP) growth for becoming a middle-income country as well as attaining the goal of Sustainable Development Goal (SDG), said the local economists.
The achievement of over seven per cent GDP growth for the fiscal 2016-17 seems impossible without adequate investment in the private sector from both local and foreign sources, they said. Former Bangladesh Bank Governor Dr Salahuddin Ahmed said that country can become a middle-income status by 2021 if it raises its GDP growth a little more to a sustained 7.5 per cent a year.
“Achieving a 7.5 per cent growth per year could be challenging, but not totally impossible”, said the former BB governor to the Daily Observer.
Keeping inflation within expected level, more local and foreign investment could help achieving the GDP target, Ahmed pointed out.
Diversification of export basket, improvement in investment climate by improving power supply, port operations and regulations and access to long-term finance for achieving the growth projection are the major challenges, said Adviser to the former Caretaker Government Mirza Azizul Islam to the correspondent.
As per the latest information of the United Nations Conference on Trade and Development (UNCTAD), Bangladesh received $1.6 billion in the last year, but country needs about $5.4 billion to fulfill the dream of getting middle-income status by 2021, said Mirza Azizul Islam.
More radical economic policies, governance indicator, skilled manpower and infrastructure with the financial and other special incentives are required for attracting more inflow of investment in the country”, said the economist.
FDI inflows remain below one per cent of GDP because of low investment. On the other hand, the government has planned to borrow from banking sector near about 43,0000 crore in the upcoming fiscal to meet the budget deficit, which would definitely hinder the private sector growth, said Centre Policy Dialougue (CPD) Executive Director Mustafizur Rahman. In the latest monetary policy statement of Bangladesh Bank, the target of the private sector credit growth declined which is not good for economy, Rahman claimed. The Idle credit growth target should at least 17 or 18 per cent for attaining sustainable development goal, he added.
Country needs to utilize its labour and capital to improve productivity and investment rate by more than five percentage point.
GDP growth in China has been nine on average since 1975, while in South Korea and Thailand, it has been eight per cent growth for last two decades, Rahman pointed out.
Mustafizur Rahman has underscored the need for ensuring an investment friendly environment both for local and foreign investors to achieve the expected level of GDP growth.