It was the same projection of the World Bank in its Bangladesh Economic Update released in April.
The forecast is a 0.4 percentage points lower than the government fiscal GDP growth target of 7.2%.
The WB development update has projected 6.2% GDP growth in the next FY’18 as it said the consumption will fall further with a declining remittance flow.
During the launch of report yesterday, World Bank Lead Economist in Dhaka Zahid Hussain termed the Bangladesh’s economic growth a “shared prosperity” one, saying the country’s bottom 40% people’s income growth or consumption per capita is 0.43 percentage points higher than that of the total population.
According to the report, without boosting total factor productivity growth and private investment relative to GDP, Bangladesh is unlikely to sustain 7% growth going forward.
Bangladesh has outperformed India, Pakistan and Bhutan, but fell behind the neighbours in East Asia including China, Vietnam and Cambodia on this indicator in sharing prosperity, it said.
The Bangladesh’s consumption per capita of the bottom 40% grew by 1.77% per annum during 2005-2010, while that of total population expanded by 1.34% per annum.
Zahid, however, projected a grim picture on the SDG (Sustainable Development Goal)-1 achievement with the poverty reduction and economic growth trends in the country.
He said: “If the country wants to achieve SDG’s goal-1, the Bangladesh GDP growth needs to pick up to 8.8% annually or it has to focus on more inclusive growth with the current 6.1% growth average between 2005 and 2010.”
According to the SDG-1 Goal, a country will have to cut its poverty to below 3% rate by the year 2030.
On the 7.05% GDP growth in the last Fiscal Year 2016, Zahid said industrial growth was the main driver to the Bangladesh’s overall GDP expansion with a rebounded export earnings.
“Bangladesh’s export is heavily dependent on the ready-made garments. Its export diversification policy has not worked. The country should work on the diversification,” he said.
The WB economist said the gap between the government’s investment target in the 7th five-year plan and the achievement is widening which is a bad news for the country.
“Although the country’s savings to the GDP is higher than the investment to the GDP, the private investment is not occurring, it creates question whether the capital flight is going on,” he added.
Explaining about the lower investment than the target, Zahid said Bangladesh is not improving in WB’s doing business indicators and its policy while structural reforms are not getting pace with the entrepreneurs, especially the foreign investors, who are not getting faith here.
The lead economist has cautioned about the increasing urban inflationary trend saying it will affect the inclusive growth of the country.
He said: “The sudden pick of the urban inflation may be an impact of the salary hike of the public servants. But this inflationary pressure needs to tame down.”
The WB development outlook has showed the security and financial and trade shocks as the main downsized risks for the economic development of the country.
“The security shocks have the potential to cause damage to the economy, particularly impacting investment and consumer confidence,” said Zahid. He also said there are some international shocks like weaker-than-expected global trade, increased trade protections in some countries, weaker-than-expected remittance and an unexpected tightening of global financing conditions on the Bangladesh’s economy.