Bangladesh on track to hit growth target-cbank chief

DHAKA, Jan 14 (Reuters) - Rising business confidence from greater political stability and good a crop forecast have put Bangladesh back on track for 6.5 percent economic growth this fiscal year, the country’s central bank chief said.

The World Bank in November said Bangladesh’s economy could grow by as little as 4.8 percent in the fiscal year to June, a forecast the government immediately rejected.

The central bank later said growth in the current year could be 6.2 percent, because of the likely impact of the global financial crisis.

“The country is now poised to achieve 6.5 percent annual growth as envisaged in the current year’s budget announced in June 2008,” central bank governor Salehuddin Ahmed told reporters at his office on Wednesday.

Bangladesh achieved similar growth in the previous (2007-08) fiscal year while the south Asian country of more than 140 million people was under emergency rule by the army-backed interim authority.

Salehuddin, giving an outlook for the economy for 2008-09 (July-June) fiscal year, said growth prospects brightened after Prime Minister Sheikh Hasina took power on Jan. 6 after winning a landslide election victory.

“As the economy performed reasonably well (in H1 of current fiscal year) and investment confidence got a boost as the political uncertainty ended with orderly assumption of power by an elected government, overall real growth looks poised to attain the initial projected level of 6.5 percent,” the governor said.

Bangladesh harvested a bumper crop of rice, the country’s main staple, and saw steady growth in textile export and remittances from expatriate workers -- the two mainstay of its economy -- over the past year.

Bangladesh’s exports in November surged 13.4 percent to $1.297 billion from a year earlier on the back of rises in sales of clothing and other textiles, the Export Promotion Bureau data showed on Monday.

The central bank governor said that since Bangladesh is producing low-end products, it is unlikely to be affected by the globnal slowdown in the near future.

Money sent home by Bangladeshis working abroad in December rose 20.5 percent to $765.79 million from a year earlier, the central bank said.

These two sectors are expected to grow further if the global economic recession does not persist long, while farm production may also accelerate as the new government plans to deliver farming inputs including fertiliser at cheaper rates, officials and economists say.

Salehuddin said that even if exports got hurt drastically in the remaining months of the current fiscal year, the overall annual growth “looks unlikely to fall below 6.0 percent”.

Unlike economies facing heavy capital outflows and a credit crunch in the current global turmoil, credit and liquidity conditions remain easy in the Bangladesh economy.

“Problems and weakness if any arising in specific sectors will be addressed with appropriate monetary and fiscal support,” the governor added.

“The crop outlook for the coming rice season is also good, with the prevailing good weather and the authorities facilitating timely availability of inputs,” the governor said.

He said overall growth in the agriculture sector, which contributes 20 percent in the economy, in the current year is expected between 3.8 percent to 4.0 percent, against 3.6 percent attained in the year to June 2008.

The industry sector output is likely to grow between 7.4 and 7.9 percent in 2008-09, compared with 6.9 percent in the previous year.

“Manufacturing activities remained buoyant in the first half with domestic demand supported by credit growth at rates well above 20 percent and with still healthy export demand indicated by 30.7 percent export growth during July-October,” he said.

Salehuddin said that declining trend of consumer price index inflation was expected to continue with good domestic output and softening import prices of key production inputs, food grains and manufactured products.

“Annual average CPI inflation is projected to come down to around 8.5 percent by the end of the year, against the initial projection of 9.0 percent in July,” he said.

Reporting by Serajul Islam Quadir; Editing by Anis Ahmed and Toby Chopra