Bangladesh economy is likely to grow at a rate of 7.2 per cent during the ongoing and the next fiscal years (FY), according to projections of the Standard Chartered (StanChart).
“We project the Bangladesh economy to grow at around 7.2 per cent during FY 2018-19 and FY 2019-20,” said Saurav Anand, an economist for South Asian region with SC, during an interview with a group of journalists on Monday.
Mr Anand is a member of the global research team of the leading financial giant that visited Dhaka this week.
The StanChart’s growth projection for Bangladesh is notably lower than the government’s growth target for this fiscal.
According to the government’s projection, the country’s economy will grow at a rate of 7.8 per cent during FY 2018-19.
When asked about the reasons behind the lower than expected growth projection, the StanChart officials pointed at the present volatile global trade scenario.
There are some uncertainties within the global trade scene now, especially due to the ongoing trade war between US and China, they said.
This global economic uncertainty may have some negative impact on the Bangladesh economy, which in turn may result in a lower growth than the government’s projection, they opined.
However, the Standard Chartered officials observed that Bangladesh and other South Asian countries are quite well poised to take advantage of the ongoing US-China trade war.
They pointed out that a large number of business and manufacturing units will move out of China to other countries in the Asian region due to the ongoing trade war.
“The south-east Asian countries are already quite well positioned to reap the benefit of this trade war-related relocation,” said David Mann, Global Chief Economist of StanChart.
“However, another region in Asia, which can gain the most out of this relocation, is South Asia.”
When asked about how Bangladesh should prepare itself for reaping the benefit of this relocation from China, Mr Mann emphasised human capital development.
“Boosting the country’s education system is critical for preparing the necessary human capital. At the same time, physical infrastructure needs to be in place also.”
“Focus should be given on building both soft infrastructure and hard infrastructure,” he added.
Researchers from the global financial giant also observed that ensuring a business-friendly environment is also crucial for making the most out of this ongoing relocation out of China.
Removing red-tapism and simplifying taxation process while broadening tax base are crucial for increasing the ease of doing business in the country, they observed.
When pointed at the rising amount of non-performing loans (NPL) in the country’s banking sector, the StanChart officials emphasised ensuring good governance in the banking sector.
“Obviously, there is no alternative to ensuring good governance in the banking sector to address this rise in NPL,” said Saurav Anand. “Focus should also be given on preserving the asset quality,” he added.
At the same time, he also emphasised formulating a time-bound resolution framework to ensure gradual decrease in NPL in the overall banking sector.
StanChart Head of ASEAN and South Asia FX Research Divya Devesh also spoke on the occasion.