WB questions 7.65% growth projection

The World Bank has questioned 7.65 percent growth projection for the current fiscal year raising doubts over claims of robust expansion of manufacturing sector and domestic demand.

The multilateral lender said manufacturing sector has been estimated to grow faster this year than last year’s pace, although production capacity has not increased as private investment has remained almost stagnant.

“It is also difficult to believe that there has been excess production capacity,” said Zahid Hussain, lead economist of the World Bank in Dhaka, presenting their report on Bangladesh Development Update.

In the report, the World Bank said growth is projected in the 6.5-7 percent range in the medium term.

The WB alsoraised doubtover 7-8 percent estimatedgrowth of domestic demand.Possible explanations behind such spike in growth could be either growth of employment, labour income or spike remittances.

“But we do not see any leap in any of the cases,” he said,saying that the growth of employmentwas at 2.2 percent and labourincome at 2.7 percent in 2017.

“Remittance inflows have recovered. Yet, the level of remittance still remains 2.7 percent less than in July-march of fiscal year 2015-16,” he said.

“If consumer demand grows, where is the source of growth?” said Hussain.

The World Bank’s skepticism comes nearly a week after the Bangladesh Bureau of Statistics said of a record 7.65 percent growth in the fiscal 2017-18, driven by double-digit growth in manufacturing and construction sectors. 

WB Country Director Qimiao Fan was present among others.

The WB said the latest growth estimate is exceeding Bangladesh’s potential GDP growth at 6.5-6.6 percent.