However, analysing observations by some entrepreneurs the chamber said the economy is still on the growth path, though concern has been expressed as to how long the economic growth momentum can withstand the continuing political confrontations and weakening of the institutions of economic and political governance.

"Complaints have been made about deteriorating supply of electricity and gas, widespread corruption, discretionary powers still retained for the tax officials and above all, political confrontations and recent tendency amongst a section of workers to take law into their own hands at the instigation of outsiders," the chamber said in its Review of Economic Situation April-June 2006.

"Complaints have also been made against unrealistic approach in the decision-making process of some important government agencies. One entrepreneur pointed out the recent requirement of the Securities and Exchange Commission (SEC) that any company having paid-up capital exceeding Tk 40 crore must go public. The entrepreneur feels that this is against the spirit of free enterprise."

During the period, the MCCI said, the major growth area was industry, particularly manufacturing and construction, which recorded notable expansion in the quarter under review. "The performance of the agriculture sector was relatively weaker compared to that of the previous year," the chamber said.

It said a favourable aspect of the country's macroeconomy during the period, was the return of stability in the foreign exchange market, and an improvement in the country's foreign exchange reserve.

"Increased inflows of remittances and better performance of the export sector together helped raise Bangladesh Bank's foreign exchange reserve by US$430 million in the review quarter (compared to a decline of $10 million in the corresponding quarter of the last year) to $3340 million at end June 2006."

The generally stable domestic and external macroeconomic environment benefited all the real sectors of the economy. In particular, the industry sector benefited from increased investment and the creation of additional production capacity in textile and leather sub-sectors, which boosted manufacturing production in the quarter under review, the MCCI said.

In the monetary sector, the chamber said, the central bank continued its restrictive monetary policy stance by increasing interest rates in the review quarter.

"While the central bank pursued a restrictive monetary policy, reserve money growth in Q4 of F06 was unusually high, at 19.8 per cent, compared to 9.7 per cent in the last fiscal year. This resulted in a larger volume of currency issue than anticipated."

The foreign exchange market remained relatively stable. The exchange rate underwent a mild appreciation by 0.4 per cent in the quarter under review. In the earlier quarters -- Q1, Q2 and Q3 -- of FY06, the exchange rate depreciated by 9.7 per cent compared to 4.2 per cent depreciation in FY2005.

The MCCI said the average inflation rate was 7.08 per cent in April of the review quarter, compared to 7.07 per cent in Q3, 6.91 per cent in Q2, and 6.78 per cent in Q1 of FY06. In April, point-to-point inflation was 7.46 per cent, compared to 6.62 per cent in April FY05.

"The rise in international commodity prices and the upward adjustment in some domestic administered prices provided the major inflationary impetus during the quarter. The relative stability of the exchange rate during the period did not have any perceptible moderating influence on the inflationary pressure," the chamber said.