Country Report Bangladesh April 2009

Outlook for 2009-10

• The Awami League (AL) is expected to serve a full term in office, having secured a huge parliamentary majority at the general election in December. The main opposition Bangladesh Nationalist Party won just 29 seats.
• The likely monopolisation of parliament by the AL for the next few years raises the risk of large street protests, a tactic that has been used in the past to express opposition to the government.
• The Economist Intelligence Unit expects the budget deficit in fiscal year 2008/09 (July-June) to widen to the equivalent of 5.4% of GDP, compared with an estimated 4.8% in 2007/08.
• Real GDP is expected to grow by 3.9% in 2009/10. Weaker inflows of workers' remittances will constrain private consumption growth, while the downturn in the global economy will temper demand for Bangladeshi exports.
• Upward price pressures, particularly those resulting from rising food and fuel costs, are expected to ease in 2009, when we expect consumer price inflation to average 5.4%, compared with 8.9% in 2008.
• The merchandise trade deficit will be substantial in 2009-10 as the external environment becomes more challenging for exporters.

Monthly review

• In February the AL-led coalition government faced its toughest security challenge to date, when troops from a paramilitary force, the Bangladesh Rifles, staged a mutiny at their headquarters in the capital, Dhaka.
• The government has launched an inquiry into the mutiny, after around 70 army officers and civilians were killed. The army also announced that it has launched its own inquiry into the matter.
• A local business group, the Federation of Bangladesh Chambers of Commerce and Industry, has demanded financial aid from the government to help businesses to deal with the negative effects of the global recession.
• On March 11th Bangladesh Bank (BB, the central bank) cut the repo rate, the rate the bank charges on loans to commercial banks, by 25 basis points to 8.5%. The discount rate remains unchanged at 5%.
• In March BB reiterated that it expects real GDP to grow by around 6% in2008/09.
• Merchandise exports increased by 11.2% year on year in January, a marked slowdown compared with the year-earlier period, when exports surged by 50.9% year on year.

Source: Country Report

This report covers the following industry codes:
SIC Code: 1;70
NAICS Code: 11;72

• Highlights
• Outlook for 2009-10: Domestic politics
• Outlook for 2009-10: International relations
• Outlook for 2009-10: Policy trends
• Outlook for 2009-10: Fiscal policy
• Outlook for 2009-10: Monetary policy
• Outlook for 2009-10: International assumptions
• Outlook for 2009-10: Economic growth
• Outlook for 2009-10: Inflation
• Outlook for 2009-10: Exchange rates
• Outlook for 2009-10: External sector
• Outlook for 2009-10: Forecast summary
• The political scene: A mutiny leaves Bangladesh in a state of shock
• The political scene: The government launches an enquiry
• The political scene: Civil-military relations are tested
• The political scene: Democracy index: Bangladesh
• Economic policy: The government mulls stimulus measures
• Economic policy: The central bank eases monetary policy
• Economic policy: Public finances have come under pressure
• Economic performance: The government maintains its growth forecast
• Economic performance: Remittances and exports remain at risk
• Data and charts: Annual data and forecast
• Data and charts: Quarterly data
• Data and charts: Monthly data
• Data and charts: Annual trends charts
• Data and charts: Monthly trends charts
• Data and charts: Comparative economic indicators
• Basic data
• Political structure