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Bangladesh economy faces trouble, says World Bank

Bangladesh economy faces trouble, says World Bank

Bangladesh will likely miss its economic growth target as exports weaken and remittances from workers abroad fall because of the global financial crisis, the World Bank said Wednesday.
Bangladesh's projection for economic growth in the year ending June 2009 is 6.5 percent but in the worst-case scenario it could slump to 4.8 percent, officials of the Washington-based lender said in the South Asian nation's capital, Dhaka.
Bangladesh, a nation of 150 million people, grew 6.2 percent in the last fiscal year despite a devastating cyclone followed by a monsoon flood. About 40 percent of the population lives on $1 a day.
"The current state of the Bangladesh economy is stable, but in view of the unfolding global financial crisis, the situation could deteriorate in as little as three months time," World Bank economist Vinaya Swaroop told reporters at the release of a report on the economy and financial meltdown.
The country's garment exports and the flow of remittances might be the biggest victims of the crisis, officials of the bank said.
The U.S., where the credit crisis originated, is the main destination of Bangladesh's chiefly low-end garment products, which earn the country $10 billion a year.
The country also has a target of $10 billion in remittances from the Bangladeshi workers abroad _ most of whom are in the Middle East _ but may receive only $8.9 billion, putting pressure on foreign exchange reserves, which are used to import food and buy equipment for industrial and service sectors, Swaroop said.
A slowdown in the construction sectors of Middle Eastern countries would also affect Bangladesh's target of sending some 600,000 more workers overseas by the end of this fiscal year.
"If the prospective workers fail to go abroad and if remittance flow from overseas workers decreases, it will put extreme pressure on the economy," Swaroop said.
Zahid Hussain, another bank economist, said Bangladesh's encouraging efforts to reduce poverty would lose pace if the economy slows.
In a separate report on Sunday, the bank said annual economic growth running at 6 percent for the past few years has reduced the percentage of people living on $1 a day to 40 percent from 49 percent in 2000.


Updated : 2021-10-20 18:04 GMT+08:00