The Bangladesh economy has stepped into 1994 as one ol the best managed economies in South Asia It is also likely to be one of the slowest growing ones.

The policy package that the Finance Minister pronounced last June were aimed at a six per cent growth of the economy This target is now unlikely to be achieved largely because of a slowdown In investment in the public sector Private sector interest in investment also remains lukewarm in spite of cuts in bank rate tn two instalments.

The focus of the economic policy in Bangladesh during die last three years was on stabili sation and reform. Macro-economic management in Bang ladesh has received acclaim at home and abroad. Reforms have

also progressed al a fast pace. Indian Commerce Minister Pranab Mukherjee, recently in Dhaka, has said that Bangla desh was one step ahead of India in the area of economic reforms

Reforms have borne good re suits tn the agricultural sector Breaking of the BADC's monopoly in agricultural Input distribution has induced good response from the private sector Rice production is ap-proaching seH sufficiency level. It remains to be seen, however, whether rice production can keep pace with the growth in population without reducing acreage under other crops

Good foodgrain production has helped to keep the Inflation rate down In Bangladesh, the

official estimate of inflation rate Is made by measuring movement in the Dhaka Middle-Class Cost of Living (DHAM COL) index. Food alone has a share of nearly 63 per cent in the representative expenditure pattern used to estimate the DHAMCOL index. Food prices have declined continuously since November 1992 on a year on year basis. As a result the inflation rate in September 1993 on a twelve-monthly average basis was negative

Low inflation has helped the Taka to appreciate in real terms, making exports dearer to foreign buyers. Reduction in av erage tariff rate on imports has helped exporters to balance this to some extent by cutting cost. At the same time Die Wage push subsequent to public sector wage award to industrial workers had hurt the exporters. In balance, the export sector has shown growth owing largely to continued growth In exports. Imports are also showing some growth.

Bangladesh's gross International reserve continued to grow during the first half of the current financial year. The October reserve leyel was'235 crore dollars — 12.6 per cent higher than the reserve leyel in July, The combination of low inflation. lack of acceleration in exports and imports ^nd growing levels of reserve is symptomatic of stagnation. Given her low level of income,' Bangladesh cannot afford this stagnation.

The strategy that was drawn up to come out of the stagnation was tp use the annual development plan (ADP) to inject about Taka 9700 crores as public sector investment in the economy. Investment spending level In the first four months is much lower than the pro-rata target. With inter-cadre rivalry among government officials at its peak it is likely that there will be further deceleration In public investment.

Private investment is not doing any belter. In spite of two cuts in. bank rates, commercial banks are using deposlt'money for the purchase of government papers becauqg of poor interest in term loans. Unconfirmed reports say that the private sector banks, which did not lower lending rates earlier, are planing to do so in the future.

The outlook for the next six months Is that the economy will remain stable — but there will be very little movement forward.