Left, WB Country Director Ellen Goldstein and senior economist Zahid Hussain

Poor roads and ports are becoming a challenge for Bangladesh's economy, the World Bank said in its economic update released yesterday.

The lender forecast the country's economic growth in the current fiscal year at around 6 percent, saying such a growth rate is healthy given the unfavourable global conditions.

The WB's senior economist Zahid Hussain presented a keynote at a press conference in Dhaka, while its Country Director Ellen Goldstein was present.

The report said Bangladesh's economy is performing below its potential, mainly due to weak external demand and domestic investment constraints.

Deteriorating conditions of roads and ports and a gas shortage in the manufacturing industries are among the factors that hinder investment, it said.

The country's economy grew by 6.3 percent and 6.7 percent in 2011-12 and 2010-11.

The government projected this year's growth at 7.2 percent, which the WB said is a challenging proposition.

“Progress in important highway development stalled due to irregularities in project implementation,” it said. “At Chittagong Port, the improvements in equipment availability and berth occupancy were overshadowed by disruptions from the rising turnaround time and low productivity,” it said.

The port handled Bangladesh's 80 percent export-import business worth more than $60 billion in 2011-12. But the Dhaka-Chittagong highways have been in bad conditions for years. Sometimes, congestion on the roads severely delays export-import business.

Though power generation increased by more than 24 percent between February 2010 and February 2012, the demand-supply gap was 1,000 megawatts in June this year.

“The expensive rental power plants have a short-term positive impact on growth, but longer-term solutions are needed,” the WB said. “Gas supply to industries also declined.”

The report also said a deepening crisis in the Eurozone is posing another threat to Bangladesh's economy, already evident in exports, particularly of knitwear products.

The global lender also focused on the deterioration in governance at state-owned commercial banks. Underutilisation of development programmes, especially big projects, and growing subsidies also cast a shadow on the higher growth prospects.

However, the WB said there are some silver linings, especially the improvement in macroeconomic management.

These are resilient remittances, declining inflation and international commodity prices, and a tight monetary policy. Flexible exchange rate and interest rates were also in favour.

A 57.4 percent rise in manpower exports in 2011-12 has helped the country maintain a double-digit growth in remittances.

Inflation fell to 7.4 percent in September from 12 percent in the same month a year ago, mainly due to a decline in commodity prices on the international market, said Hussain of the WB.

News: The Daily Star/Bangladesh/22th-Oct-12