Country Report Bangladesh July 2000 Updater

Economic forecast: International assumptions

World growth will continue to recover in 2000-01, although it will remain below trend. Real GDP growth in the US -- Bangladesh's main export market -- is expected to strengthen to 5% in 2000, from 4.2% in 1999, before decreasing to 2.9% in 2001. This will help to maintain export growth, although a failure to raise production and competition will prevent Bangladesh from taking full advantage of this. Export growth will also be strengthened by an expected recovery in Bangladesh's other leading markets -- the EU and Japan. The expected rise in international food prices will be limited by ample domestic supplies following a good rice harvest, but the import bill will face pressure from rising industrial raw material and international commodity prices.

International assumptions summary (% unless otherwise indicated) 1998 1999 2000 2001 GDP growth US 4.3 4.2 5.0 2.9 OECD 2.4 2.9 3.7 2.9 EU 2.6 2.2 3.1 2.8 Exchange rates (av) US$ effective (1995=100) 119.3 116.4 117.5 112.9 ¥:US$ 130.9 113.9 107.5 104.3 US$:?(a) 1.12 1.07 0.97 1.04 Financial indicators US$ 3-month commercial paper rate 5.34 5.18 6.52 6.55 ¥ 2-month private bill rate 0.72 0.27 0.05 0.64 Commodity prices Oil (Brent; US$/b) 12.8 17.9 24.5 20.0 Gold (US$/troy oz) 294.1 278.8 285.7 290.0 Food, feedstuffs & beverages (% change in US$ terms) -13.9 -18.6 -2.8 5.3 Industrial raw materials (% change in US$ terms) -19.6 -4.3 16.8 8.8 (a) Ecu before 1999.

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