Published in The Daily Observer on Sunday, 29 May 2016
Major economic indicators go against sustainable economy
The slower growth of the country’s major economic indicators is a serious threat to attaining sustainable development of the economy of the country, a number of economists told the Daily Observer recently.
The slower growth of export especially in the manufacturing sector, remittance inflow, lower private sector credit demand, FDI inflow and revenue collection by NBR are indicating that the current growth rate is not satisfactory to achieve Sustainable Development Goal (SDG), they observed.
Although the government is providing the necessary logistic support for the stakeholders and foreign investors, but the growth rate of the national earnings failed to attain a satisfactory level.
Noted economist and adviser to the former caretaker government, Mirza Azizul Islam said that the readymade garment manufacturers are exporting their products mainly to their existing markets. They have failed to export their RMG products to new destinations. Products diversification and new export destinations can enhance more export earnings from this sector. “Of course, the stakeholders as well as the government have to undertake more proactive initiatives to create new export markets for earning US$50 billion from the RMG sector.” The unresolved issue of GSP in the USA market is hindering the sector to get new markets. Actually, the export earning is not a large volume in USA market, but it has already made a negative image for Bangladesh. “Although the exporters and the government are sincerely working to get back GSP facilities in USA market, but their efforts go in vain,” he said.
When asked on the remittance inflow in the country, he said, the highest remittance comes from the Middle-Eastern countries. But the economic downfall of KSA made a negative impact on the country’s remittance inflow.
The KSA government are sending back thousands of Bangladeshi workers to minimise their economic crisis. He expected that remittance inflow might decline even further in near future.
CPD Executive Director Mustafizur Rahman said the lower credit demand in the private sector is obviously one of the major obstacles for expanding industrialisation process in the country.
The industrialists are not showing their eagerness to expand their business because of unfavourable business atmosphere in the country. Already industrial loans declined in the recent months as the lending rate is still high compared with the neighbouring countries, he said, adding that the private sector stability is related to the macro-economic stability.
Meanwhile, Bangladesh Bank has reduced the private sector credit growth target which is not a wise decision. The ideal private growth target should be at least 18 per cent for the country like Bangladesh, Mustafizur pointed out.
When asked on lower FDI inflow, Mustifizur said Bangladesh needs five to six per cent Foreign Direct Investment (FDI) of its GDP each year in order to attain a vibrant economy by 2021 as the current FDI inflow in the country is not at a satisfactory level. Actually, the business climate is unfavourable as access to utilities, like electricity, gas, transportation, waste management and office space, are still inadequate and below investors’ expectations, said Mustafizur.
Former Bangladesh Bank Governor Dr Salehuddin Ahmed said 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 SDG. 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, he said. Salehuddin said that the country can achieve the 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. Keeping inflation within expected level, more local and foreign investment could help achieve the GDP target, he pointed out. Talking about lower revenue collection by the National Board of Revenue (NBR), Salehuddin said each year NBR failed to achieve the revenue collection target of the government. Inefficiency of the NBR official is the reason behind it. In the recent time, the government has reduced the revenue collection target for the ongoing fiscal. Already, the government plans to borrow Tk 43,000 crore for the upcoming fiscal 2016-17 to meet the budget deficit. “If the NBR could successfully collect the revenue the government need not borrow from the banking sector” he pointed out.