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GDP growth may dip to 4.8pc

WB fears global meltdown shockwave likely to hit in 3 months; Mirza Aziz rejects the forecast

Staff Correspondent
The World Bank (WB) yesterday said GDP growth in Bangladesh might come down to 4.8 per cent in the cuncnt fiscal year from the government projected 6.5 per cent as readymade garments export and remittance inflow suffered due to the global financial crisis.
Impact of the crisis will be much more clear after the next three months, the WB says. Contingency measures like providing government assistance need to be carefully thought out.
The WB expressed these views at a press briefing on Global Financial Crisis and its likely impact on Bangladesh at its Dhaka office. Country Director of the WB Xian Zhu
spoke at the briefing where lead economist of the bank Vinaya Swaroop made the keynote presentation.
Finance and Planning adviser AB Mirza Azizul Islam however rejected the WB projection on GDP, saying it might cross six per cent
In his presentation, Vinaya Swaroop said, " We don't know what will happen in Christmas season. Three months from now, the picture may look very different. Bangladesh has to remain watchful, particularly the government, civil society and the media."
Swaroop went on, "It is extremely important to ensure that the new elected government has
the relevant information and briefing to be able to quickly move and take relevant policy actions."
WB senior economist Zahid Hossain said if the garment industry isaffected, the government would have to consider some kind of safety net system.
Xian Zhu said developing countries like Bangladesh are most likely to be affected by the global crisis through exports and remittances, m&fe’ 'cdtfritrfe^ tffay Stiffer from decline in trade, especially in terms of commodity exports. Furthermore, as labour markets slacken, foreign workers are likely to suffer disproportionate impacts on their earnings, which may reduce remittances.
Swaroop said. "Bangladesh did not have any impact on the first round of the global financial crisis because of lack of integration. " But it is integrated with the world economy in exports and remittance.
He projected two possible scenarios on GDP growth in the current fiscal year — one is 5.4 per cent and in the worst case 4.8 per cent.
Last year. GDP growth was 6.2 per cent.
The WB economist said "In two months time, there may be some orders for gar-ments from China to Bangladesh. There is likely to be a 500 million dollar export from leather industry, we don't know whether it will be maintained or not. In postChristmas -- in January-- the situation will be much clearer. These are export
orders, remittances in the 2nd quarter. But we don't know what actually would happen."
He added," Big economies are reeling under the impact of the global financial crisis. What is happening in China? Manufacturing industries are collapsing. In the USA, three Automakers-- General Motors, Chrysler and Ford--are collapsing. Further deterioration in economy may have major adverse implica-lionT’
Zahid Hossain said, in a year when the global economy is facing serious crisis like the great depression, 5.4 per cent GDP growth is not a bleaksituation.
The government has to take much more tougher policy actions. The challenge three months ago was high pricing. Bangladesh Bank should be watching private credit growth. But the quality of credit is not good. Contingency planning by the government is needed.
MIRZA AZIZ
On the WB projection on GDP, Mirza Aziz said, "I don't know how they made the estimate. However. I do not agree with them in any way.”
Talking to reporters after a meeting of three state owned banks (SOBs) yesterday at his planning ministry office, the adviser said, "Till now the indicators— export, remittance, inflation, credit growth-- all are positive. Therefore, there is no probability of GDP growth being as low as 4.8 per cent. Even recently, IMF projected GDP growth to be 5.5 per cent."
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