Bangladesh Bank sees the ongoing political turmoil as a major threat to the economy as the country’s longest blockade in about two decades is disrupting economic activities and putting investors at bay.
“The central bank is concerned as disruptions from political unrest have reemerged, casting [a] shadow on expectations [of achieving the projected GDP growth],” said BB Governor Atiur Rahman.
“I earnestly hope that peace and calm will return soon, enabling realisation of the growth prospects projected earlier,” he said while releasing the Monetary Policy Statement (MPS) for the second half of the 2014-15 fiscal year.
“Even as Bangladesh economy’s resilience against debacles is well known, overcoming from the prevailing disruptive situation is of extreme urgency for maintaining the growth momentum and poverty decline,” he added.
The MPS projected between 6.5 and 6.8 percent GDP growth in the current fiscal year, on the basis of dynamism in investments and productive activities in the first half of the fiscal.
It said imports have recovered from growth sluggishness of the past couple of years. The current account balance has turned from surplus to deficit, from pick up in imports mainly of capital machinery and production inputs.
The BB governor said the welcome trend of recovery in the first half of the fiscal boosted hopes that the FY2015 GDP growth would significantly exceed the projections.
“When the economy was leaping forward, it hit the barricade [political unrest]. Everybody needs to keep in mind that economic advancement is connected with the fate of crores of working class people and the growing number of entrepreneurs,” said the governor.
Deputy Governor Shitangshu Kumar Sur Chowdhury said investors took “a wait-and-see approach” in the first four months of the current fiscal year.
“In the following two months, investors had started to come back with plans to invest, shaking off their concerns. But the political situation took a sudden turn and dampened their enthusiasm,” he said.
Bangladesh’s economy has been doing remarkably well in the last one decade, but the latest spate of political unrest has put a brake on it, preventing the country from tapping its full economic potential, the MPS states.
The ongoing blockade, longest since 1996, began on January 6 after the government denied the BNP and its allies permission to hold rallies to protest at the 2014 parliamentary elections they had boycotted.
The blockade is costing the country over Tk 2,277 crore every day, according to Dhaka Chamber of Commerce and Industry, a leading trade body.