The outgoing year of 2009 coincides with the first year of the newly elected Awami League-led government. Economic performance, however, reflects the effects of policies only with a time lag, so that the positive or negative outcomes of this year cannot be directly attributed to what policies the government pursued since its coming to power. The year's economic performance also largely reflects the impact of the global recession, making it difficult to pass a judgment about whether an outcome is because of, orin spite of, certain policies.

On the positive side, Bangladesh has emerged as one of the countries least affected by the global economic downturn. Export growth, which has been near zero on a year on year basis, may appear disappointing, but is still far superior to the large contraction of export experienced worldwide, including in most developing countries. The growth of GDP has been fairly robust at nearly 6 percent annually, made possible by strong growth performance of agriculture and other sectors —mainly construction, services and informal manufacturing —mostly catering to the domestic market. Both disbursement and repayment of agricultural credit has increased substantially. The growth of remittances from migrant workers remains strong, in spite of falling numbers of workers going abroad. And the government's revenue earnings have increased at a modest rate, despite the stagnation, and even decline, in import trade.

On the negative side, there are several risk factors confronting the economy. First, although there are signs of a global economic recovery, our export trade is not still out of the woods. Globally, garment exports were affected to a lesser extent and at a later stage than the exports of, say, electronic products or automobiles. And, among the garment exporting countries, Bangladesh has been less severely affected because of its reputation as one of the lowest-cost sources of supply. But the process may now work in the reverse order, making Bangladesh's export outlook less encouraging as and when a global economic recovery begins. Moreover, the garment industry in Bangladesh is extremely diverse in terms of size of factories, management cultures, and production and marketing efficiency. Some units have closed down, while others have expanded their operation even during the recession. There will be a need for

restructuring of the sector in order to stay competitive, particularly as there will be more pressure for wage increases.

The second worrying aspect is the sign of continuing lack of business confidence. The import of capital machinery and industrial raw materials have continued to fall, as much as by about 20 percent, on a year on year basis, in each of these two import categories during the first quarter of the current fiscal year. The accumulation of foreign reserves is partly due to strong growth in workers' remittances, but is partly also a reflection of stagnation or contraction in investment and manufacturing activities. In the absence of hard evidence-based analyses, one can only guess about the factors that are inhibiting private investment: excess production capacity resulting from export shortfall, uncertainty about the policy environment, and a poor outlook for the gas and power supply.

Thirdly, the inflation rate, after an initial cooling down, is on the rise again. As expected, the price hikes in the markets for essentials are continuously subjected to public scrutiny; but less attention is paid to the rate of expansion of money supply—currently at about 19 percent annually -- which underlies the overall inflationary tendencies. The build-up of foreign reserves is one factor that fuels domestic money supply; but a picking up of the rate of expansion of credit to the private sector is also adding to the pressure on the money supply. How does one explain this credit expansion in the face of dwindling import demand and stagnating levels of industrial activities? It is true that agricultural credit disbursement has accelerated, but so has credit repayment. Industrial term loan has in fact fallen. The central bank should look at the uses of the borrowed money and should satisfy itself that the credit expansion is contributing to economic recovery.

The lack of reliable up-to-date data remains the single most important obstacle in assessing the current performance of the economy. At a time of economic volatility, economic analyses need to be based on at least quarterly, if not monthly, data. The state of our official national statistics is such that, on a real-time basis, not merely the future, even the past is uncertain. The situation calls for a remedy on an urgent basis.

Wahiduddin Mahmud is professor of economics, University of Dhaka, and chairman, Panel of Economists for the Sixth Five Year Plan.