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In Bangladesh, the gross domestic product (GDP) in Fiscal Year 2013 (ended 30 June 2013) grew by 6.0%, higher than projected in the Asian Development Outlook (ADO) 2013 in April. Export growth accelerated briskly, but imports were flat, such that net exports markedly contributed to growth. Agriculture growth slowed to 2.2% because weather was unfavorable and rice prices fell. Industry grew by 9.0%, with strong expansion in construction and small-scale manufacturing. Services growth slowed slightly to 5.7%, reflecting stagnant imports and politically inspired strikes that disrupted trade.
|Selected Economic Indicators (%) – Bangladesh||2013||2014|
|ADO 2013||Update||ADO 2013||Update|
|Current Account Balance (share of GDP)||2.0||1.9||1.0||-0.5|
Source: Asian Development Outlook (ADO) 2013 Update; ADB estimates.
Year-on-year inflation edged up from 7.2% in October 2012 to 8.0% in June 2013, as national strikes disrupted food supply and drove up prices, and as administered power and fuel prices were increased. Inflation slowed to 7.7% in FY2013 from 10.6% a year earlier.
Imports rose by only 0.8% in FY2013. Exports grew by 10.7%, accelerating from 6.2% growth in FY2012, on higher garment exports. The balance of payments showed a large surplus of $5.1 billion in FY2013, boosting gross international reserves to $15.1 billion. Following the tragic garment factory collapse in April 2013, comprehensive protocols were signed to foster worker safety and welfare.
Money supply growth was below the central bank’s program target, even as banks’ net foreign assets rose sharply. The reason was growth in credit to the private sector languishing far below target as political uncertainty deterred investment. The Bangladesh taka has strengthened against the US dollar since early 2013, reflecting the large balance of payments surplus.
GDP growth in FY2014 is projected at 5.8%, lower than the ADO 2013 forecast, as exports and consumer and investment demand fall short of expectations. The current account will show a small deficit. The central bank is expected to adopt measures to contain inflation but also ensure adequate credit flows to maintain steady economic growth. The key challenges are to boost private investment and maintain macroeconomic stability in the run-up to elections.
Source: ADB. 2013. Asian Development Outlook 2013 Update. Manila.