GDP growth gathers pace
According to the Citi NA Half Yearly Economic Update, Bangladesh has managed to set growth on a higher trajectory, posting GDP growth of 7.05% in FY 2015-16 on the back of surge in both private and public investment as well as increase in consumption expenditures. Higher implementation of Annual Development Program (ADP) and higher consumption driven by new pay scale for public sector employees and moderate inflation helped in boosting the GDP growth according to the CITI NA updates, published last month. The updates also said that manufacturing sector grew the most by 10.1% followed by service sector and agriculture, which grew by 6.7% and 2.6% respectively in the past fiscal.
GDP growth target for FY 2016-17 has been set at 7.20%, while the target is to achieve 8% by 2020 as per the government’s 7th Five Year Plan. To support the growth, Investment-GDP ratio of 34.40% has been aimed for the same period from the existing level of 29.38%. Given the importance of private investment growth in achieving the target, the government has planned on speeding up public investment on infrastructure through its fast track projects. BDT 18.73 billion has been allocated for eight fast-track mega projects (Padma Bridge, Metro Rail, Rampal Power Plant, Paira Sea Port, Matarbari Power Plant, and so on) in the budget for FY 17, which is directed at providing the necessary infrastructure for the private investment to flourish. To achieve sustainable growth and investment, it is imperative to reap the benefits of the favorable demographic characteristics of a large working population. Enhancing the quality of the workforce and addressing the skill gap will help align the supply side factors with supportive fiscal measures.
