The recent hike in prices of fuel oils will push up inflation in Bangladesh, the World Bank says in its ‘Global Econimic Prospects’ published recently.
.It said inflation in Bangladesh was already rising slowly but may now be accentuated by the recent fuel price hike that may make food costlier. The report said rate of inflationary rise until second quarter of 2012 was “acceptable” but consumer goods prices may shoot up now after the fuel price hike.The government raised prices of diesel, octane, kerosene and petrol on Jan 3 for the fifth time in past four years to cut down on subsidies.
The prices of petrol and octane were raised by Tk 5 per litre, and diesel and kerosene by Tk 7.
The World Bank report said despite the moderation in regional inflation since the second quarter of 2012, annual consumer price inflation exceeded 7.5 per cent in Bangladesh and Pakistan, remaining higher at 9-10 per cent in India, Nepal, and Sri Lanka.
This was significantly higher than the average for developing countries. “Food inflation moderated in countries other than India, but has started to pick up in Bangladesh and Pakistan.”
The latest data recently released by the Bangladesh Bureau of Statistics (BBS) showed that overall inflation on point-to-point basis in December last year stood at 7.14 per cent against 6.55 per cent in November. The Bureau’s estimates are based on 2005-06 as the base year.
Another statistics, based on 1995-96 as the base year, also showed the overall inflation was rising – at 7.69 per cent in December last year from 7.41 per cent in November.
Since July last year, the BBS has been releasing the statistics on inflation based on both current and old accounts.
The World Bank’s GEP report also projected that Bangladesh’s GDP growth will stand at 5.8 per cent in 2012-13 fiscal against 6.3 per cent in the 2011-12 fiscal.
The report also projected the GDP growth in South Asia region would rise to 5.7 per cent in 2013, firming to 6.7 per cent in 2015, while estimating the global economic growth at only 2.4 per cent.
The report also forecast that the growth will increase in the coming years. According to the BBS, Bangladesh achieved a 6.3 per cent growth in the 2011-12 fiscal year.
Though the incumbent Awami League led-government has set a 7.2 per cent growth target for the current fiscal, the World Bank, International Monetary Fund, Asian Development Bank and even the Bangladesh Bank does not think that target can be achieved.
The World Bank had forecast Bangladesh’s economy to grow by 6 per cent in the
current fiscal in its report on the country’s economic condition released in October last year.
However, in its GEP report, published on Wednesday, the Bank praised the remittance flow of the expatriate Bangladeshis in 2012 even though the exports did not grow much.
It said the country’s agriculture sector was in a comparatively good state to meet the domestic demand.
The report further praised Bangladesh for the improvements despite facing infrastructural problems, political instability and different global limitations.
It said Bangladesh will be benefited if it succeeds in diversifying its exports base and widen its market reach.
But the on-going crisis in infrastructure and fuel might be an obstacle, it said.
The GEP report also projected that Bangladesh’s GDP growth will pick up to 6.2 per cent in 2013-14 and 6.5 per cent in 2014-15.
The World Bank made the projections hoping the global economy will pick up in future. The Bangladesh government plans to reach 8 per cent growth target by 2015.
Meanwhile, the report also said the growth in the East Asia and Pacific region will be 7.5 per cent in 2012, which is lower than the previous year.
But the growth in this region will pick up to 7.9 per cent