Achieving the stipulated seven percent GDP growth in the current 2011-12 fiscal year may not be possible if the economic contraction in European Union countries deteriorates, Bangladesh Bank in its annual report has feared.

The report, which was published yesterday, also said that point-to-point inflation stood at 10.2 percent at the end of 2010-11 fiscal which was 8.7 percent in the previous fiscal.

It would also be harder to bring it down to a single digit rate despite maintaining a cautious monetary policy, said the report, published by Bangladesh Bank Governor Dr. Atiur Rahman at the BB headquarters at Motijheel in Dhaka.

The report also projected that the country may not be able to maintain growth trends in import and export this fiscal due to external economic risks caused by troubles in EU economies. During the 2011-12 fiscal year, the growth of both export and import may be reduced by 15 percent compared to targets, it said.

The annual report titled ‘Analysis of Bangladesh Economy’ elaborately focuses on the overall economic indicators in 2010-11 fiscal.

The report also focuses on agriculture, industrial sector, social safety net programmes, monetary policy, inflation and money supply.

Although the growth in remittance inflow is likely to hit a double-digit mark this fiscal, global trends indicate that overseas employment opportunities would decline.

The Balance of Payment (BoP) of the country would come under further stress in FY12, on increasing trade deficit despite growth in remittance inflow, said the report.

Exchange rate of taka is likely to remain under some pressure in FY12, according to the report.

The BB report also said the public expenditure went up by 28 percent in 2010-11 fiscal against an increase by 13.8 percent in 2009-10 fiscal.

It said, the classified loan has also reduced this fiscal. In 2009-10, the amount of classified loan was 8.7 percent, which stood at 7.1 percent last fiscal.

Talking to daily sun over the BB report, economist and chairman of Bangladesh Krishi Bank, Khondoker Ibrahim Khaled, also expressed his doubt over achieving 7 percent GDP growth this fiscal.

Khaled said the country’s economy will be slightly affected by the global economic meltdown, leaving a negative impact on the economy.

He said the GDP growth rates of India and Pakistan have also been affected by external causes.

The report said the government’s borrowing from the domestic banking system rose sharply by 39.9 percent in FY11, characteristically exceeding rather than falling short of initial projection, despite healthy growth in revenue receipt.

The Daily Sun/Bangladesh/ 7th Feb 2012