Editorial
Economy at watershed
BB annual report highlights challenges
The Bangladesh Bank annual report for fiscal 2006-07 pinpoints stabilising the inflation rate as a major challenge for the policy makers drawing upon the experience of the last year and the outlook for the new year. The increases in wage rates in manufacturing, agriculture, fishery and construction sectors which are slender compared with those of FY06 kept below the rates of consumer price inflation of 7.2 percent in FY07. In other words, real income fell as purchasing power eroded.
Back-to-back flooding and cyclone Sidr drastically decreased productivity which flared up inflation accompanied by rising international commodity and oil prices that pushed the inflation further on an upward spiral. Bangladesh Bank recommends an automatic adjustment of prices of petroleum products in the domestic market with some mechanisms to protect the poor from hardships. Food and agricultural input subsidies would be unavoidable. To go back to pre-flood and Sidr stage, when our food productivity matched most of our requirement, a massive agricultural rehabilitation programme must be implemented within the next six months.
Infrastructure constraints in terms of port facilities have eased somewhat but power and transports sectors need radical improvement.
Anti-corruption and anti-hoarding drives have caused interruptions in business activities. While admitting this, BB report expresses a hope that economic activities will be further geared up when 'the ongoing reform programmes are successfully implemented'. The focus should have been on the necessity for immediate further steps to free up the business environment from the panic mode it has gone into. We suggest the Better Business Forum meet at brief intervals rather than sparsely to thrash out matters with businessmen.
A redeeming feature of FY07 was strong performance of the external sector with growth in exports and imports and increased flow of workers' remittances from abroad. This helped overcome the trade deficit. The growth in the industry sector and continued buoyancy in the services sector offset lower growth in agriculture sector. With compensatory agriculture picking up, the annual report of Bangladesh Bank projects economic growth at between 6.2 and 6.5 percent in the current fiscal FY08. On that rather positive note, we have to say that all efforts must be made to keep inflation tolerable, employ more people and raise levels of productivity through investments.
For all latest news, follow The Daily Star's Google News channel.
Comments