Poor quality infrastructures, particularly road networks and yet erratic power supply, high cost of doing business and limited access to long-term finance, largely unskilled labour force, political instability and safety risks are some of the broad macro-economic challenges the country now faces, says a report.
These broad macro-economic challenges are highlighted in a report titled ‘State of the Economy by June 2013’ prepared by the General Economics Division (GED) of the Planning Commission.
The report aims to see the present state of the economy using the macro-economic stability indicators and the changes that occurred over the last four years of the present government managing the aggregate real economy.
To have a contrasting view of the change, the GED used 2005-06 as a benchmark year, according to a UNB report.
The other broad macro-economic challenges before the country’s economy are the economy of Bangladesh is not well diversified and is highly dependent on the agricultural sector for employment, limited spending on education and health sector, which led to a decline in the quality of education and primary health care, particularly for the poor, port and shipping facility is another area that Bangladesh needs to be improved.
Restoration of Mongla Port and construction of a deep sea port are among possible solutions, the report says.
Besides, the old problem of population growth and density is a challenge that cast shadow over every sector of economic development.
The GED will make a presentation on the report scheduled for Sunday at the NEC conference room at city’s Sher-e-Bangla Nagar.
Finance Minister AMA Muhith is expected to be present on the occasion as the chief guest. Planning Minister AK Khandker and PM’s Economic Affairs Adviser Dr Moshiur Rahman are also likely to be present there. GED member of the Planning Commission Professor Shamsul Alam will make the keynote presentation.
Prof M Shamsul Alam said the ‘State of the Economy by June 2013’ would highlight the overall macro-economic analysis of the country.
He said since the country’s economy is matured, there is a need for in-depth analysis. “The performances and challenges of the country’s economy would be highlighted through economic viewpoint,” Alam added.
The report highlighted key economic features like Real Sector, including GDP growth and sector contribution, savings and investment, inflation, employment, Fiscal Sector including government revenue, ADP implementation, government borrowing, External Sector, including export and import, current account balance, foreign exchange reserve, exchange rate, remittance earning, Foreign Direct Investment (FDI), foreign aid, Monetary Sector, including monetary sector performance, Agricultural Production and Food Security for Macroeconomic Stability with production of major staples.
About the GDP growth, the highlights of the report said that the annual average growth rate for the last four years in Bangladesh is 6.3%. But, from fiscal year 2012, the GDP growth is showing a declining trend and the provisional figure for fiscal year 2013 is only 6.03 %.
On savings and investment, the ratio of savings to GDP remained virtually stagnant over the last four years as national savings hovers around 29 to 30 % while domestic savings got stuck to 19.3 % over the last three years.
Since fiscal year 2011, the investment GDP ratio has been increasing though marginally but could not catch up to the available savings level.
The report highlighted that a total of 8.26 million people brought under employment during the last four years while the rate of employment creation has been the highest during the last four years than any time before.
The ADP implementation rate notched 96 % in the last fiscal year 2013 and the trend is increasing over the last four years and RADP has set the highest implementation record so far.
Although the FDI flow to Bangladesh reached $1.3bn in fiscal year 2013 up from $1.2bn from fiscal year 2012, the absolute amount is not attractive anything compared to Vietnam and Myanmar.
Bangladesh witnessed the highest disbursement of foreign aid in the last fiscal year 2013 amounting to $2.8bn compared to $2.1bn in fiscal year 2012. Increased amount of FDI in fiscal year 2013 is indicative of improving financial health of the Bangladesh economy.
To get the accelerated growth path, the report suggested that domestic growth shall have to be accelerated by creating congenial private sector investment for which calm business environment has to be ensured by the political entities and trust between government and the entrepreneurs is a must for that to face the challenges of high and sustainable growth in the economy.