Bangladesh's economic growth may slow down to 5.8 percent in the current fiscal year, largely due to sluggish exports and investment, the International Monetary Fund forecast.

A finance ministry official said an IMF mission made the forecast last month after a two-week review of Bangladesh's latest macro-economic situation.

The government set the GDP growth target for the current fiscal year at 7.2 percent.

In June, Finance Minister AMA Muhith in his budget speech said the trend of satisfactory growth will continue in the commerce and agriculture sectors in 2013 as the global economy is on the rebound.

He also said the productive sectors would get enough credit supply and the deficit in the power and energy sectors would come down.

According to the central bank statistics, like the previous year, slow growth in exports will continue this year. In July, export growth was 4.26 percent and in August it came down to 3.63 percent.

Nasir Uddin Chowdhury, the first vice president of Bangladesh Garment Manufacturers and Exporters Association, earlier told The Daily Star that exports might be slow in September.

The exporters said an economic slowdown in the EU and the US is mainly responsible for a sluggish trend in exports.

According to Bangladesh Bank data, the opening and settlement statistics of letters of credit for import of capital machinery and industrial raw materials also show a slow trend in investment.

Last fiscal year also, LG opening for import of capital machinery fell by 21.22 percent, while LC opening for im-porting industrial raw materials went down by 3.84 percent.

The negative trend continued in the current fiscal year as well. In the first month of the current fiscal year, LC opening for import of capital machinery fell by 30 percent, and for industrial raw materials the decline was 0.63 percent.

However, a BB official said the central bank is now encouraging credit flow to productive sectors under its new monetary policy.

The official said the GDP growth in the current fiscal year will be more than 6 percent.

Though the IMF predicted that the economic growth will be lower than the government's target, the lender said inflation will remain within a single digit.

The IMF mission said inflation will remain close to the government's target of 7.5 percent, according to the BB official. However, the lender is concerned about food inflation as the prices of food commodities are rising on the international market.

The IMF team expressed satisfaction over the central bank's monetary policy, saying it is in the right direction to curb inflation. The IMF encouraged the central bank to continue it, the BB official said.

News: The Daily Star/Bangladesh/2nd-Oct-12