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Bangladesh's Economic Growth to Accelerate in FY2003 and FY2004

DHAKA, BANGLADESH (28 April 2003) - Boosted by a steady growth in agricultural output and stronger demand for its manufacturing exports from the United States and Europe, Bangladesh's economy is forecast to grow 5.2% in fiscal 2003 and 5.8% in fiscal 2004, according to a major Asian Development Bank (ADB) report released today.

The Asian Development Outlook 2003 (ADO), an annual ADB publication that forecasts economic trends in the region, says data for the first three months of fiscal 2003 (ending in June) indicate a broad-based rebound in manufacturing. Furthermore, no major shortfall is expected in food grain production for the year.

The forecast marks a rebound from the country's slowdown in exports and agriculture in fiscal 2002 when gross domestic product (GDP) growth was 4.4%.

"GDP growth is likely to strengthen to 5.8% in fiscal 2004 due to a further recovery in the major OECD markets and a pickup in private sector economic activity as the Government makes progress on structural and economic reforms," the ADO says.

The accelerating growth will provide Bangladesh with the basis for sustaining economic growth and reducing poverty in the future.

The Government has taken steps to improve the macroeconomic environment by reducing the fiscal deficit, and moving toward a more market-oriented economy.

The fiscal deficit for fiscal 2003 is likely to meet the Government's target of 3.9% of GDP due to a strong Government commitment to contain low-priority expenditures, and renewed efforts in mobilizing revenue.

Inflation is likely to rise to 3.8% in fiscal 2003 from 2.4% in fiscal 2002 due to higher food and nonfood prices resulting from higher administered prices. In fiscal 2004, inflation is projected to rise to 4.5% due to more buoyant domestic demand and a depreciation of the taka.

The current account is likely to move progressively into deficit in the forecast period as import growth picks up and remittance growth stabilizes.

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