The government is likely to target a high GDP (gross domestic product) growth of 7.2 percent in the upcoming fiscal notwithstanding pared-down growth rates in neighbouring India, China and other Asian countries due to the Euro zone debt crisis.

The Finance Division has calculated 7.2 percent GDP growth before revising the country’s export target in the wake of declining export of readymade garment (RMG) products to European Union countries, said a senior official of Finance Division.

He also said the Finance Division is worrying that a lethal cocktail of most of the poor macro indicators and an environment of policy drift for International Monetary Fund (IMF) will cast a dark shadow in the country’s economy.

Next fiscal year’s estimated growth might be sharply eroded by stubborn inflation, projected high deficit along with depreciating currency, the official added.

Another official said the recent slowdown in industrial and export growth due to several internal shocks including energy crisis and lack of infrastructure would hamper the projected economic growth for 2012-13 fiscal.

As per the draft speech of the next fiscal year’s budget, the GDP growth estimate will be 7.2 percent in the next fiscal with a 9.93 percent inflation rate in April.

The world economic growth rate has been estimated at 4.1 percent in 2012 fiscal with the Asian economic growth rate of 7.9 percent. The GDP growth rates in China and India are 8.8 and 7.3 percent respectively during the same period.

Meanwhile, local currency taka has lost 12 percent of its value against the greenback in the last one and a half years. A dollar is currently trading at Tk 81.92.

Dollar was sold at around Tk 69 between 2004 and 2010. Taka was somewhat stable till August 2010, when the local currency started going down against the greenback.

Sources in the Finance Division said inflation was low and growth was on the rise in the first two years of the Awami League-led government.

In the first year of Muhith as a finance minister in fiscal 2009-10, the country’s GDP growth was 6.07 percent, while the rate was 6.71 percent in the following year.

The outgoing fiscal year's growth target was set at 7 percent, which was recently revised to 6.35 percent.

The country’s exports growth fell by 4.60 percent to $1.90 billion in April this year compared to that of the previous month due to the ongoing debt crisis in the European Union countries and downsize adjustment of prices of finished ready-made garment products by international buyers, Export Promotion Bureau (EPB) data shows.

International credit rating agencies have reduced the rating of importer like Spain in the last three years. The general buyers and prominent brands of five crisis-hit countries -- Graces, Portugal, Italy, Spain, and Ireland -- have reduced their import of RMG products from Bangladesh.

Most of the prominent European brands including Tesco, H and M and Carrefour along with some US brands-- WalMart, JC Penny, and Marks and Spencer have reduced their orders due to the debt crisis in Eurozone countries, sources in the commerce ministry said.

The commerce ministry and Export Promotion Bureau (EPB) have already revised the export target for the current year at $26.50 billion. However, the revised target has not been officially disclosed yet, Manoj Kumar Roy, additional secretary for commerce, told daily sun.

The ministry will not calculate the effect of the fall in exports in the outgoing fiscal year’s GDP growth, he added.

As per EPB data, the country’s export growth stood at 8.41 percent in the last ten months of the current fiscal against the full-year target of 15.6 percent. EPB has also set next fiscal year’s export target at $26.62 billion, sources said.

Abdus Salam Murshedy, president of Exporters Association of Bangladesh (EAB)and former president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) told daily sun that the country’s export volume declined by one billion US dollar during last ten months due to eurozone debt crisis.

Neighbouring India's annual economic growth rate has been slumped in the January-March quarter to a nine-year low at 5.3 percent as the manufacturing sector contracted and a fall in the rupee to a record low, which suggests the Indian economy remains under pressure in the current quarter, according to the Mumbai Standard Chartered Bank’s forecast.

India's GDP growth rate was much lower than expected and was even below the lowest forecast in a poll that had produced a median of 6.1 percent from predictions ranging between 5.5 percent and 7.3 percent.

The data highlights the unusual degree of weakening of the country's economy, likely driven by poor investment and widening trade gap, it also said.

Rashed Al Mahmud Titumir, chairman of Unnayan Onneshan, a local NGO, told daily sun that the country’s growth rate in the next fiscal would slow down as the government has already entered into a three-year agreement with IFM to get an Extended Credit Facility (ECF) of $ one billion, tagged five conditions including price hike of fuel, fertiliser and electricity. He also termed the deal very risky for the government just before the national election.

Awami League in its election manifesto has pledged a growth rate of 8 percent by 2013 and 10 percent by 2017, which is impossible to achieve mainly due to the harsh conditions imposed by the IMF and the external shocks from the eurozone debt crisis, he added.

Titumir also said the growth rates in Greece, Spain, and Ireland are declining due to IMF directives like austerity measures, contraction of monetary and fiscal policies and floating foreign exchange rate.

Ahsan H Mansur, executive director of Policy Research Institute (PRI), told daily sun that the next fiscal year’s stable growth rate would be sustainable if the government maintains the macro economic stability.

The country’s macro economic stability should be maintained with strong balance of payment and the IMF fund is necessary for maintaining a strong balance of payment” he added.

He, however, said the government is likely to give subsidy in some areas after discussing with the IMF.

The Daily Sun/Bangladesh/ 3rd June 2012