DHAKA, BANGLADESH (28 April 2004) - Boosted by expansion in both domestic and external demand, Bangladesh’s economy is forecast to grow 5.7% in fiscal 2003 and 6% in fiscal 2005, according to a major Asian Development Bank (ADB) report released today.

The Asian Development Outlook 2004 (ADO), an annual ADB publication that forecasts economic trends in the region, says the recent data pointed to an expected increase in industrial production and agriculture in the years ahead.

The forecast marks an acceleration of growth from the country’s recovery in agriculture and industry in FY 2003 (1 July 2002 to 30 June 2003), when gross domestic product (GDP) growth rate was an estimated 5.3%. “The macroeconomic prospects for FY2004-2005 appear favorable with upside potential from a more buoyant global economy,” the ADO says.

Agricultural growth is expected to increase, with preliminary indications suggesting a bumper aman (winter harvest) crop.

A higher budgeted fiscal deficit for FY2004 and a more relaxed monetary stance are expected to spur domestic demand.

Services sector activities, particularly trade, transport, and finance are likely to improve significantly with the anticipated further recovery in export-oriented manufacturing and continued strong food crop production.

Although growth in manufactured exports is projected to moderate with the phasing out of the Multifiber Arrangement (MFA) at the end of 2004, domestic-oriented private economic activity is expected to strengthen as the Government makes progress on structural and economic reforms.

The ADO calls for further improvements in competitiveness of the garment industry as well as an improvement of the overall environment for investment climate including infrastructure development.

The current account surplus is likely to fall considerably during the remainder of FY2004, but remain marginally positive the whole year. This forecast is contingent on the growth in imports continuing to offset the rise in exports. It is also reliant on remittances from overseas workers not changing dramatically due to the instability in the Middle East and fallout from the ongoing fight against terror.

Inflation is likely to increase to 4.7% in FY2004 due to an increase in food prices. Inflation rate for FY2005 is projected to be at 4.2%.

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