Bangladesh loses $2.2bn in 3 months of political turmoil

Dhaka: The political turmoil in the first quarter of 2015 cost Bangladesh one percent of its GDP, or $ 2.2 billion (approximately Tk 17,150 crore), says the World Bank.

The multi-lateral lending agency launched the ‘Bangladesh Development Update Report 2015’ at its Dhaka office on Sunday.
 
World Bank Dhaka office’s Chief Economist Dr. Zahid Hussain told a media briefing that the financial loss to the unrest was one percent of the Gross Domestic Product (GDP).
 
“Economic growth would have between 6.4 and 6.6 percent in the ongoing 2014-15 fiscal, if there were no political turmoil. Our estimates are it would be at 5.6 percent,” he said.
 
A blockade by the BNP-led alliance started on January 5 and lasted for over three months. The political programme seemed to have lost bite on production in the end.
 
So, the World Bank calculated the total cost by adding the daily loss of 60 days. The loss for the unrest in 2013 was calculated in the same way.
 
Asked about the breakdown of sector-wise losses, he said industries faced 25%, service sector 68 percent and agriculture 7% loss.
 
According to the Bangladesh Bureau of Statistics, Bangladesh’s GDP grew 6.12% in 2013-14 fiscal against a World Bank forecast of 5.8%.
 
About the growth being higher than their forecast, Zahid Hussain said the people of Bangladesh have dormant power.
 
“They continue to contribute to the economy using this power during setbacks,” he said.

“In addition, given the background of Bangladesh, it was seen that the years following political unrest saw great growth. The 6.12% growth in 2013-14 fiscal after the turmoil in the beginning of 2013 proves that,” he said.

“Similarly, the growth in 2015-16 fiscal would be 6.3% if no more unrest takes place,” he added.

The World Bank report forecast that the growth in 2016-17 fiscal would be 6.7%.

But increased participation of women in workplaces alongside a steady political condition will be needed for this, the report said.

The size of the economy in 2013-14 fiscal was Tk 13 trillion and 509.2 billion. The government expects the GDP in the current 2014-15 fiscal to grow at a rate of 7.3%.

Hussain said the drop in the price of oil in international market augured well for Bangladesh since it meant less fuel subsidy.

“Not only oil but prices of fertiliser and food have also dropped. Everything in the international market is in Bangladesh’s favour. 

“The government will have to spend less to subsidies,” he said.

According to the World Bank economist, Bangladesh Petroleum Corporation (BPC) started make profits from October last year due to the drop in international oil price.

“BPC is getting profit from diesel and kerosene along with petrol and octane,” he said.

He said the budget deficit, which is within five percent, was under control.

According to the report, average inflation decreased from 7.5% to 6.7%.

Both food and non-food inflation were at a moderate level, the report said.

The deficit in balance of payment of foreign transaction in the first eight months of the current fiscal (July-February) was $ 1.09 billion. There was a surplus of $ 1.8 billion in the same period last fiscal.

The report said trade deficit doubled to $ 6.4 billion.

Hussain said foreign exchange reserves were doing best among the economic indices.

“It is over $23 billion which can be used to pay import cost of over six months,” he said.

Export earnings increased 3% in July-March period.

But the government’s debt will increase as it borrowed more from savings certificates, Hussain