Asian Development Bank (ADB) projected Gross Domestic Product (GDP) of Bangladesh to moderate to 6.9 per cent in FY2017 as domestic demand rises more slowly and the slide in workers’ remittances deepens although the government set target to achieve 7.2 per cent GDP growth in the current fiscal.

 “Slower export growth caused by weaker consumer demand in the euro area and the United Kingdom is expected in part because the currencies of these destination markets have depreciated against the dollar,” the ADB flagship publication ‘Asian Outlook 2017’ made the predictions.
The ‘Asian Outlook 2017’ was launched at a press conference at its Dhaka office at Agargaon in the capital yesterday. 
Deputy Country Director, Cai Li, Team Leader, External Affairs, Gobinda Bar, and Staff consultant, Dr. Zahid Hossain were present at the press conference. Principal country specialist of ADB Jyotsana Varma made a presentation on Bangladesh part.
Explaining the lower projection compared to government target Jyotsana Varma said its ADB’s assumption on basis on present scenario of economic activities. 
In her presentation Jyotsana Varma said private investment will rise only slightly as investors turn cautious ahead of national elections in 2018.
Public investment is expected to strengthen through fiscal expansion as the authorities speed up their implementation of infrastructure projects, she said.
Growth in FY2018 is expected to remain unchanged at 6.9 per cent as the broad momentum in the previous year continues, she added.
However ADB said the growth may accelerate after next general election.
ADB predicted that agriculture growth to slow further to 2.4 per cent growth in FY2017 and 2.3 per cent in FY2018, mainly because of limits on area expansion and productivity improvement.
It also said the industrial growth to decelerate to 10.6 per cent in FY2017 in tandem with domestic demand.  With reinvigorated domestic demand resulting from higher export income and a more moderate decline in remittances, industry growth will edge back up to 10.7 per cent in FY2018. 
Services growth is expected to slow to 6.0 per cent in FY2017, reflecting slower growth in agriculture and industry, and remain unchanged in FY2018.
About inflation, ADB expects to rebound in the second half of FY2017, however, with likely higher global prices for oil and other commodities, upward adjustments to natural gas and electricity prices as the government continues to align prices with production costs, and further implementation of salary hikes introduced in FY2016 for government staff and private educational institutions to adjust for inflation and improve living standards. The overall Inflation is projected to pick up in FY2017 to average 6.1 per cent. 
Varma said Bangladesh faces an employment challenge. 
ADB said productive, well-paid jobs need to be created for the 1.4 million workers who join the workforce each year. 
Female workforce participation is still low despite sizeable employment in the garment industry, minimizing women’s contribution to economic development, the report observed, the outlook said. 
“Productive jobs in manufacturing and modern services are needed for surplus labour currently in low-productivity agriculture,” it added.
However it said the government seeks to tackle the employment challenge by promoting high growth led by manufacturing and by accelerating regional development and the rural transformation.
ADB said all projections depend on the following---revenues need to rise quickly if the government’s sizeable infrastructure development program is to be implemented. The exchange rate should be managed flexibly to off set lower remittance inflows and encourage exports.
Institutional and regulatory reform needs to be accelerated, and infrastructure deficits amended, to improve the investment climate, ADB suggested.
It further said political stability must be maintained and security strengthened to boost investor confidence.
Bangladesh needs to reduce the cost of doing business to attract investment, foster rapid manufacturing-led growth, and create jobs, Manila based lender said.