Country Report Bangladesh January 1996 Main report

Outlook: Economic growth is being depressed by political situation--

The outlook for the economy is bound up with the country's political future, and it is the deleterious economic effect of the current political deadlock that may eventually force the BNP and AL into a compromise. The strikes are estimated to be costing the country $30m-60m per day in lost output, while the failure to implement the public-sector reform programme because the BNP has to keep an eye on the adverse political fallout is holding up the use of aid funds.

--and natural disasters

The effect of adverse weather on foodgrain production in 1995 has also depressed economic growth. The EIU's estimate for GDP growth in 1994/95 (July-June) is only 4.8%, slightly lower than the government's own estimate of 5%, with agricultural growth estimated at a mere 0.2%. In the current fiscal year, 1995/96, GDP growth is forecast to be still lower at 4.6%, because of the disruption being caused by the strikes and stoppages before the election. The slackening will be greater if the law and order situation deteriorates after the election. Agriculture, despite early reports of a poor aman (main) harvest, is forecast to grow by 1.5%, while industrial growth should continue buoyant, at 10%, despite the repeated interruptions to production as a result of the strikes. In 1996/97, provided political unrest subsides, GDP growth should rebound to nearly 6% as businesses are able to concentrate on producing and marketing their goods rather than on mitigating the effects of strikes; agriculture can be expected to stage a small recovery, with jute in particular putting in a strong performance as farmers respond to the recent rise in international prices.

© 1996 The Economist lntelligence Unit Ltd. All rights reserved
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