Bangladesh growth may slow to 5.8%, World Bank says

DHAKA (Reuters) - Bangladesh's economic growth may slow to 5.8 per cent in the fiscal year to June 2013, compared with the government target of 7.2 per cent, the World Bank said on Saturday.

"The economic growth in the fiscal year of 2013 is likely to fall to 5.8 per cent compared with 6.3 per cent in fiscal year 2012," said Mr Salman Zaidi, Acting Country Head of the World Bank in Bangladesh.

"Weak exports and investments due to the euro-area crisis, domestic supply constraints and intensified unrest in the country are likely to have contributed to this slower growth," he told reporters.

"An immediate hindrance to growth is the political complexity and frequent widespread violence of late in Bangladesh."

World Bank economist Zahid Hussain said that lack of growth pick-up in agriculture, slower manufacturing growth due to weak exports, domestic consumption and investment demand, and disruptions to services due to street unrest were also factors to hinder government's targeted growth.

"Gas shortages and slow infrastructure improvements, decline in import of capital machinery, volatile electricity generation growth, subdued construction activity and falling private credit growth are also major challenges for the slower economic growth," Dr Hussain said.

He said that investment had stagnated at 25.2 per cent of gross domestic product.

"By Asian norms, Bangladesh's investment rate should be 31.4 per cent, given per capita income," he said.

Inflation declined to 8 per cent in March from a peak of nearly 11 per cent in February 2012.

The 7.5 per cent inflation target for 2013 fiscal year was still achievable if there were stable commodity prices, the domestic supply chain was not disrupted by political unrest and monetary policy caution was maintained, Dr Hussain added.