Economics

MACROECONOMIC PARFORMANCE OF BANGLADESH

GDP Growth

The government in its election manifesto pledged to increase the GDP growth to 8% by 2013 and

10% by the year 2017. In the budget of 2011-12, the government has targeted 7 percent GDP growth rate. It took two decades for Bangladesh to achieve 6 percent GDP growth rate from 4 percent. Now the government aims to achieve another 2 percent growth rate within five years without any major changes in policy which seems to be improbable considering the previous growth path.

Figure 1: GDP growth scenario in Bangladesh

Inflationary pressure increases

Low level of investment

GDP growth performance might not achieve the

targeted level

Negative export growth

Lower level of ADP

implementation

Savings – Investment

In the budgetary framework of FY2011-12, the finance minister has targeted the investment GDP ratio to be 26.27 percent. The expected progress will be achieved through ADP implementation, expediting private sector investment and making external sector competitive through a stable exchange rate. The government has also set target to achieve 8 percent growth by 2013 which requires uplifting investment from 24.99 percent to 32 percent as a share of GDP by 2013.

Achieving this targeted rate of investment by the FY13 is a challenging task for the government as the investment hovers around 25 percent. An annual growth of investment has to be 2.55 percent in order to achieve the targeted rate of 32 percent as a share of GDP by 2013. Meanwhile, Bangladesh needs 1.27 percent investment as a share of GDP to meet the targeted rate of 26.27 percent in the upcoming years which seems to be a daunting task for the

government as the public investment is declining by 0.26 percent each year and also the private investment is not...